Armor provides defense against foes and the weather, though keep in mind that some armor is also geared specifically for particular biomes: Cold Resistant armor types are best for protection against cold/snow environments while Heat Resistant is for hot/desert environments. Going into these biomes without the right armor will cause one's health to steadily decrease over time until death or leaving that biome.
All base armor is unlocked with Technology Points at certain tiers, with all but shields and cosmetic types (like Tocotoco Cap) having additional schematics that can be found in game to make a better version, albeit requiring additional materials to make (and subsequently repair).