Dealing Damage sounds like a simple affair, but in fact it is not. There are several factors that determine how much damage you deal to a target.
Defense against damageEdit
This reduces all damage, and is a property of Boss ships, as well as being acquired through Powerups.
Certain abilities reduce damage taken, often from a specific direction. There may be a trade-off in the other direction.
Mitigation against a specific type of damage, like Area-of-Effect or collision damage. Granted by passive abilities.
According to devs, damage calculation USED to be subtractive, but is now multiplicative. Damage multipliers (0.75 for a 25% reduction, for example) are all multiplied together to calculate the final damage taken.