Good questions! Yes, they do stack (that is body armor, worn armor - being armor itself your helm and your gauntlets combined, and spell casting magickal armor) however it is totally impossible to gain 100% armor, the cap combined (meaning a Penthanian earth mage wearing max castable armor with a max spell up) is actually less than that. Where you'll see the tiering of the % is with the addition of shield parry in the update to follow this one (idealy), for example:

Jonkirk swings a two-handed bringer of justice at you!
You manage to barely defend some of the blow with your shield!
Your armor absorbs some of the damage!

Say the sword hit for 30, the barely defended parry blow may stop say 10% of the hit on the first tier (so 3 pts) leaving 27 to get to the 2nd tier where it hits your armor/body-armor/spell-armor combined and removes a % of that damage.

No, Drakes can not wear the bigger armor, in part because it couldn't be fit over their body-type and in part because it'd be super imbalancing since their body armor effectively gives them that bonus anyway, except for Rawcliffe whose body armor will mysteriously disappear following the update. (whoops!)

Someone made mention that extra HP really doesn't mean a whole lot, but I think you'll find after the update that the differences in HP do make more of a difference in total.

Please also keep in mind that while the armor system will do worlds to help get us towards our final combat system, a couple other smaller things (making parry work right, a few fixes to how attempting to hit someone works, and stances) are also part of the total planned system at completion. Idealy the 3 of those will be included in the update following this one and I can't begin to explain how sweet it will be! We've been putting this stuff all together for like 4-5 years now, it's exciting to finally be this close.


Best!
Colin