The armor type is determined by the ship, as is the damage type. Some ships deal more damage to certain kinds of armor and less to others.

The amount of armor doesn't change the type, and more armor is always better.

I think (can't check at work) that this chart lists off the different armor types: https://forums.sinsofasolarempire.com/177682

According to this, a simple way to look at it is every point of armor effectively increases the hull of the ship by 5%. If you had 0 armor and it took 100 shots to bring the hull, adding 1 armor will make it take 105 shots, 2 armor will take 110, etc.

It actually works by reducing the damage taken, and the formula is in the link. Its just easier to think about it by increasing the number of shots the ship can take by 5%.

Its a good upgrade. I wouldn't jump ahead in the tech tree to take it over a cheaper hull upgrade, but I also wouldn't skip it.

And yes, armor type and armor value are different. Type is determined by the ship, and never changes (except maybe in a patch). The value can go up from research (or abilities), and can also go down from abilities (the Vasari cap ship ability that takes 6 armor off a target is awesome against targets you want to focus fire on). (The link in this post also has a chart of how much damage each ship does to other ships.)