There are two primary flows of damage processing:

Outgoing Damage (When you hit an enemy)

Incoming Damage (When you're hit)

This article focuses primarily on Path of Exile 2 Currency incoming damage, i.e. how enemies’ hits are calculated against your defenses. If you're looking for outgoing damage, let me know—it's a different but equally intricate system.

Incoming Damage: Full Order of Operations
Let’s go step-by-step through the order in which incoming damage is calculated, from the moment a hit connects to the point damage is subtracted from Life, Energy Shield, or Mana.

Step 1: Hit Confirmation (Avoidance)
Attack vs. Evasion:

Attack hits roll against the defender's Evasion Rating.

If evaded, the hit does not occur.

Spell Suppression:

If a spell is suppressed, the damage dealt is reduced (typically 50%).

Block:

If you block the hit (either spell or attack), the hit is negated or partially reduced depending on your gear/mods.

If the hit fails due to any of the above, no damage is processed.

Step 2: Ailment and On-Hit Effects Check
The game now checks for secondary effects of a successful hit:

Can it ignite, shock, poison, or bleed?

Does it apply on-hit mechanics like Leech, Curse on POE 2 Divine Orbs for sale Hit, or Mark?

Ailment Avoidance/Immunity modifiers are checked here.

No actual damage is applied yet—this only flags whether these effects will trigger.