I currently run with a crafted tank set for the particular bonus, so i could just replace in place of repair. however, the set bonus still applies even when broken. so if you have the 5 piece bonus passive, and 1 of the 5 breaks, you then lose that 5 piece bonus. Once a particular piece breaks, you then begin to lose enchant bonuses, trait and passive bonuses.
as your durability drops, the effectiveness (in ESO the armor) drops.
so if you are VR14 in full VR14 battle gear you pay a higher price for failure than VR14 in VR12 battle gear. while this seems good, and it is, it also means more time farming gold to cover that increase in durability (in theory at least). i say this, because typically the higher the quality (example: quest gear versus end game content gear) the more durability, though the same damage tends to occur. in general its probably more of a set limiter placed on the armor (how many hits can you take before you get to the center of the tootsie pop), to how many deaths/mobs you can deal with before you have to 'stop' (repair your armor, farm for repairs, endure punishment for failure and/or success via less gear based advantages, etc). I always considered it a percentage prior to break, in all MMOs i played that had durability.
