This guide has been gleamed from various boards and sources. I was worried that it might get removed or deleted from the web at some time so I have put it up here for mine and your use. I found it very interesting and I hope you do too. Also if you are the original author of any of this data please contact me so that I can give dues.

Damage types
In Everquest 2, there are ten types of damage:

Crushing, Piercing, Slashing, Poison, Disease, Heat, Cold, Divine, Magic and Mental.
Crushing/Piercing/Slashing is also called Physical.
Poison/Disease is also called Noxious.
Heat/Cold is also called Elemental.
Divine/Magic/Mental is also called Arcane.
Noxious, Elemental and Arcane are sometimes collectively referred to as non-physical damage, or, confusingly, as magical damage.

Different types of damage are caused by different types of attacks:
A dagger, for instance, causes Piercing damage, but if the dagger is poisoned, it may also cause Poison damage.
A sword causes Slashing damage, but the sword may have a proc that sometimes causes Divine damage when it hits.
A wizard has a lot of spells that cause Heat or Cold damage, and so on.

Mitigation
For each type of damage, there is a corresponding protection: vs. cold, vs. heat, vs. magic, and so on. The protection is a number in the hundreds or thousands, and can be viewed on the first tab of your Persona window.

This number acts as a mitigation, that is, it aborbs a portion of the damage from each attack that lands on you. The percentage can be seen by holding your mouse over the corresponding number in the Persona window.

If you, for instance, are being hit by a club, and have 47% vs. crushing, you will abosrb ("mitigate") 47% of the clubs crushing damage, and get hit by the other 53%.

Where can I view my Mitigations?
Physical Mitigation is displayed in the upper right corner of your persona window as an average of your Crushing, Slashing, and Piercing Mitigations. If you hold your mouse over it, you see it broken up into the three different percentages.

The other seven Mitigations (Poison, Disease, Heat, Cold, Divine, Magic and Mental) are displayed separately in the bottom part of your Persona window. You can hover your mouse over these too to display percentages.

Mitigation caps
The maximum possible Mitigation for each type of damage is (your level)*150, which corresponds to absorbing 75% of the damage from an attack.[1]

The conversion from a numerical value to a Mitigation percentage is done on a Diminishing Returns curve.[1]

Resists
Every time you are subjected to a non-physical attack, you also get a chance to resist it. If you succeed, you suffer no damage at all. Resistance is for spell attacks like Avoidance is for physical attacks.

It is believed, but not proven, that the chance to resist a non-physical attack is based on the same number as mitigation. Therefore, the seven non-physical mitigations are also called resists.

It is certain, though, that the chance to resist an attack is modified by the level difference between you and your enemy.

Avoidance
When an enemy physically attacks you (melee or ranged), you have a chance do Dodge the attack, Parry it, Block it (if you have a shield equipped), or Deflect it (if you're a Bruiser/Monk).

If you succeed with any of these, the attack is Avoided entirely, and you suffer no damage.

Your ability to Avoid melee attacks depends on:

Your Agility
Your Defense skill
Your Parry skill
Your Deflection skill, if you're a Bruiser/Monk
The quality of your shield, if you have one
The type of armour you wear
Any AA's that modify your chance to Block, Parry or Deflect
Your ability to Avoid attacks is summed up in the Avoidance number, which is displayed on the first tab of the Persona window. This number is translated into a percentage on a diminishing returns curve[1], which can be viewed by holding your mouse over the number.

However, your actual chance to avoid an attack also depends on the level and offensive skills of your enemy

Contested and Uncontested Avoidance
All Avoidance is modified by the opponent's level. This means that the Monk Comat Art Tsunami, which promises a 100% chance to avoid the next attack, actually has a small chance of failing against a higher level enemy.[7]

Most Avoidance is also Contested, meaning that the chance to Avoid is modified by your defensive skills and your opponent's offensive skills. (A "contest" is made between your respective skills.) This means that, for instance, the Tsunami Combat Art will have a higher chance of failing against a Named, Heroic or Epic mob.

Contested Avoidance includes:
Avoidance gained from Agility (unconfirmed)
Avoidance gained from the Monk Combat Art Tsunami[7]
Uncontested Avoidance includes:

Avoidance gained from Blocking (regardless of where the blocking chance comes from) (unconfirmed)
Avoidance gained from +Parry Adornments[10]
Avoidance gained from extra ripostes granted by the Brawler Strength line, the Warrior Stamina line, and the Rogue Wisdom line (unconfirmed)

Why Uncontested Avoidance is better
When fighting higher level enemies, Uncontested avoidance will be modified by the enemy's higher level, while Contested avoidance will be modified by both the higher level and the higher skills of the enemy. Epics generally have huge skill bonuses, enabling them to ignore most Contested Avoidance.

This is one of the reasons Brawlers have trouble tanking high-end raids; brawlers have much less Uncontested Avoidance than plate tanks, so in practice, plate tanks will be better at Avoiding Epics than Brawlers are!

Max Health / Max Power
Max Health depends on a character's level, Spells/Combat arts/AAs that increase Max Health, and the Stamina attribute.
Max Power depends on level, Spells/Combat arts/AAs that increase Max Power, and the characters' Primary Attributes.

Primary Attributes
The Primary Attributes of the different classes are:

for Guardians - Strength
for Berserkers - Strength
for Paladins - Strength and Wisdom
for Shadowknights - Strength and Intelligence
for Bruisers- Strength
for Monks- Strength
for Troubadours - Agility and Intelligence
for Dirges - Agility and Intelligence
for Swashbucklers - Agility and Strength
for Brigands - Agility and Strength
for Assassins - Agility and Strength
for Rangers - Agility and Strength
for all priests: Wisdom
for all mages: Intelligence

Autoattacks
Auto-attacks are physical attacks (melee or ranged) that are made automatically when you're in Auto-attack mode and standing close to your target.

The Auto-attack range is shorter than for most Combat Arts, so if you're casting Combat Arts you may not notice you are standing too far away to Auto-attack.

If you're in Auto-attack mode, Auto-attacks occur automatically in between Spells and Combat Arts, even if you're queuing them so they are cast without interruption (chaining them). However, an Auto-attack always has to wait until the current Spell/Combat Art is finished.

Some people make a special chat window for their Auto-attacks, or assign a different colour to Auto-attack messages. That way it's easier to see if you're missing out on Auto-attacks.

The Delay listed on your weapon determines how long time must pass between each Auto-attack, but this time is modified by Haste (see below). Use the command /weaponstat to see your actual Delay.

For most classes, Combat Arts do a lot more damage than Auto-attacks, but paying attention to them can still increase your DPS significantly. This is especially true for Monks and Bruisers, whose Haste and DPS modifiers allow them to do massive amounts of Auto-attack damage.

Haste and DPS modifiers
The DPS modifier increases your damage per Auto-attack (roughly speaking, how hard you swing/throw/stab/shoot).

The Haste modifier increases your Auto-attack speed (roughly speaking, how fast you swing/throw/stab/shoot).

Haste and DPS only affect Auto-attacks. They do not affect the casting time or damage of Combat Arts or Spells. Increasing casting times is achieved through Spell Haste.

Both Haste and DPS are numbers between 0 and 200, and are visible in your Persona window. Both numbers translate into a percentage between 0% and 125% on a diminishing returns curve[1], which is visible when you hold your mouse over them.

0% DPS means you will make the Auto-attack damage that is listed on your weapon. 17% DPS means you will do 1.17 times that damage, and so on.

0% Haste means you will swing your weapon with the Delay listed on it in Auto-attack mode. 17% Haste means you will swing your weapon 1.17 times as often during a minute, and so on.

Let's say you have a weapon with a 1.5 second delay. At normal Haste (0%), this means you will make an Auto-attack every 1.5 seconds. With 100% Haste, you will make twice as many Auto-attacks in the same time, which means your weapon delay is halved: 1.5s/2 = 0.75s. A Haste of 25% will give an Auto-attack delay of 1.5s/1.25 = 1.2s, and so on.

Effects of Haste and DPS
In theory, increasing DPS and Haste by the same percentage will increase your damage by the same amount.

Increased Haste has the added benefit of making procs go off more often. 39% Haste will theoretically make your procs trigger 1.39 times as often, for instance.

However, increased Haste may also cause your Combat Arts/Spells to interfere more with your Auto-attacks. Auto-attacks can only be made in between Combat Arts/Spells. As you increase your Haste, your Auto-attacks will be spaced closer and closer, and will spend more time waiting for a Spell or Combat Art to finish. This gives a penalty to your Auto-attack damage, which will, in general, become worse with increased Haste.

Say, for example, that your Auto-attack Delay is 1.1 seconds after Haste is applied, and you're chaining Combat Arts. Most Combat Arts last 1s (0.5s casting time + 0.5s recovery time), so an Auto-attack can only take place between every second Combat Art, effectively increasing your Autoattack Delay to 2 seconds! For melee classes, especially Monks, this can have a significant effect on total damage output.

(Note: Replace 1s with the actual times required for your Spells/Combat Arts, after Spell Haste is applied. Monks will have to take their own Spell Haste group buff into consideration since GU#37. Use the /weaponstat command to see your actual Delay.)

There are two ways to deal with these problems:

Time your Combat Arts so they always occur occur between two Auto-attacks. With some training, it's even possible to see your Auto-attacks occur on-screen, and time your Combat Arts to this. Having a dedicated chat window for your combat info, and/or making Auto-attacks messages a different colour, will also help.
Tweak your Auto-attack Delay by using weapons with different Delays. If you don't want the trouble of timing your Combat Arts, try to use a weapon with a delay of a whole number of seconds after Haste is applied.
According to EQ2 dev Chris Kozak, there is no lower limit for weapon delay[3,4]:

The only cap on weapon speed is having your max haste at 100%. So a 1.2 weapon doesn't hit any mythical minimum delay barriers as some might believe.

Procs
Procs are effects that have a chance to be triggered by an event. When they go off, the effect is "processed", hence the name "proc". Typical procs include

armour imbuements that have a chance to heal you when you are being hit
weapons with built in "extra" damage, like a club that has a chance to deal additional heat damage with each blow
poisons, which have a chance of dealing poison damage to your foe when you hit them with a melee or ranged attack
buffs that give extra damage each time you attack
AA's that have a chance to grant stun immunity on a group ally each time you cast a beneficial spell on them
Procs that are triggered by a physical attack, will trigger both on Autoattacks and on Combat Arts, and both on Ranged and Melee attacks. The wording in spell descriptions is often wrong or confusing, though.

Procs should only trigger on the first attack of a Double Attack[9].

When using one weapon in each hand, only the one in your primary hand will trigger procs. However, your primary weapon will trigger procs embedded on both weapons. You don't have to worry that the proc on your weapon will be wasted if you place it in your offhand.

Proc rates
Procs are designed to trigger the same number of times per minute, regardless of how fast your weapon, Combat Art or Spell is. The proc rate (number of procs per minute) is only affected by

Haste for Auto-attacks
Spell Haste for Spells and Combat Arts
A haste of, for example, 18, will make you attack 21% faster than normal, which means your procs will go off 1.21 times as often, and so on.

Spamming Combat Arts without interruption could theoretically double your proc rate, since procs are triggered by both Combat Arts and Autoattacks. But that assumes that no Auto-attacks are lost because Combat Arts "get in the way" of them.

Proc chances
The chance for each individual Spell, Combat Art or Autoattack to trigger a proc is calculated using only two factors: the base proc rate, and the Delay of the attack.

For instance, let's say you are Autoattacking using a weapon with a 3-second delay. That means you have the potential to attack 60/3 = 20 times per minute. A proc that triggers on the average 2 times per minute, will then have a chance of 2/20 = 0.10 = 10% to trigger on each Autoattack.

If you apply 25% Haste, the chance to trigger on each Autoattack will still be 10%, but you will make 25% more Autoattacks in a minute, so your proc rate (number of procs per minute) will go up. A proc that triggers an average of 2 times per minute, will now trigger an average of 2.5 times per minute.

Interpreting proc rates
The way EQ2 treats procs has been changed a number of times, and spell/item descriptions have not always been updated correctly. Use this guide to figure out what the actual proc rate for your spell/item is.

Proc rates are sometimes given in this form:

"This effect has a 4.5% chance to trigger each time you attack".

However, this description assumes you are using an attack with the "standard" delay of 3 seconds. If you have any other delay, the proc chance is modified to keep the average number of procs per minute constant.

For auto-attacks, the delay is the one that is listed on your weapon.

For Spells and Combat Arts, the delay is the casting time plus the recovery time.

For instance, if the proc chance for a physical attack is given as 4.5%, a weapon with a 3 second Delay will have a 4.5% chance to trigger on each hit. A weapon with a 6 second Delay will have 9% chance to trigger on each hit, since you only swing it half as many times during a minute. A Combat Art with a 1 second Delay (0.5s casting + 0.5s recovery) will have roughly 1.5% chance to trigger on each hit, and so on.

Proc rates may also be given in this form:

"This effect will trigger an average of 1.5 times per minute".

This description assumes that your Haste and Spell Haste is 0%. With Haste (for Autoattacks) and Spell Haste (for Spells/Combat Arts), your average number of procs per minute will increase proportionally. Double the attack speed, will give double the number of procs per minute.

Sometimes, no specifics are given about the proc rate, like this:

"Each time you attack, there is a chance [...]"

In these cases, the proc rate is usually the "standard" 1.8 times per minute (which is equivalent to a 9% chance to proc on each swing of a 3 second delay weapon).

Diminishing Returns
Since Game Update #29 (the release of Echoes of Faydwer), many stats have diminishing returns, that is, adding one more point to the stat has less and less effect the higher you get.

This includes:

All Mitigations (the increase in damage absorption diminishes)
Avoidance (the increase in chance to avoid physical attacks diminishes)
Haste (the increase in Autoattack speed diminishes)
DPS (the increase in damage per Autoattack diminishes)
The diminishing returns curve is relative to your current level. If you're, say, level 50, your mitigation cap is much lower, and the diminishing returns kick in much earlier, than if you're level 70.

Area effects
-against mesmerized enemies
Mesmerized enemies are now immune to area effects. Using an area effect attack will only wake up the enemy you're targeting, not its friends.

Criticals
Every attack has a chance to do critical damage. This is supposed to model the situation when you get something "just right", for instance, when your arrow hits an enemy right in the eye, and causes more damage than a simple chest wound would.

In the same way, healing effects have a chance to cause critical healing.

Both critical damage and critical healing events are called criticals or crits. The process of doing critical damage/healing is called critting.

All Autoattacks, Spells and Combat Arts that do healing or damage, seems to have a chance to crit.

Leanan on the Venekor server has done experiments with criticals[6], and has arrived at the following formulas:

Autoattacks and spells do (Max damage + 1) to (Max damage * 1.3) when critting. This also goes for healing spells.
Combat arts do 1.3 times their normal damage when critting.
Spells/Combat Arts that cause a predetermined number of damage/healing effects, like DoTs and HoTs, only have a chance to crit on the first effect. This also goes for spells like the Warlock's Rift: It causes one point of damage directly, then levitates the mob and causes around 4000 points of crushing damage. Only the first, single point of damage has a chance to crit, making critical damage meaningless as far as that spell is concerned.

Damage and healing effects caused by procs have a chance to crit each time the proc triggers.

Hate
Since GU #40, you can view the hate modifier (how much your hate gain is increase/reduced due to buffs, hate transfers, etc) in your Persona window. This makes the Hate system in EQ less opaque and may actually make it possible to document it.

Hate list
It seems that (unconfirmed):

Each mob maintains a hate list
The hate list contains all players the mob "remembers", and a numerical value that represents how much hate it "feels" towards each of them.
The hate list is ordered, but not necessarily from highest to lowest hate, since there are spells and combat arts that change the "threat priority" without changing the amount of hate.
The mob will try to attack the person first on the hate list - which is not necessarily the one with the most hate. If it is unable to attack that person - for instance, if the person is standing at range and the mob is rooted - it will try the next person on the hate list.
When someone's Hate with a mob gets much higher than the person's above them on the Hate List, the Hate List may reorder itself. This doesn't happen as soon as someone merely has more hate than the person above them; they need to have a lot more.
When a person dies, it is removed from the hate list (the mob "forgets" them), and the mob attacks the person who is now on the top of the list

Hate gain
It is generally believed that:

1 point of damage causes you to gain 1 point of hate with the mob.
1 point of healing causes less than 1 point of hate.

Caps
According to Chris Kozak, developer at SoE, there is a 50% cap on Hate transfers, siphons, gains and reductions:

You can stack hate transfers/siphons but they will cap out at 50%. The same applies to hate gain/reduction which also cap at 50%. Spells cast by the same class obviously won't stack but otherwise they will.
Exactly what this means is not clear. Does the cap apply to the giver, to the receiver, or to both? If the receiver caps out, but not the giver, will the giver still get full hate reduction? If three people transfer 20% hate each to someone, whose hate transfer will be reduced to keep the total under 50%?

Experience
Chris Kozak on Achievement Experience:

You will actually get slightly less if the quest is red con to you. When an event is above your true level then it uses your level instead of the events level to calculate the xp amount. It's not a huge amount if you are just slightly below the level and probably won't even be noticed. On stuff like collections or explorations where people run their low levels through the higher level events then it will be a significant impact.
In other words, don't hand in collection quests or explore areas far above your level. It also means that a quest will give you the most experience points if you're precisely the level it's listed as or higher.

Level differences
... for quest updates
To get quest updates for mob kills, your level needs to be at least 3/4 of the level of the highest player in the group, rounded up. But the level difference never needs to be less than 6 levels, and can never be more than 15 levels. The level of the mob does not matter.

... for combat experience
To get experience for mob kills, the average level of your group can be no more than nine levels above the mob's level. (unconfirmed)