I was told in another thread that when you attack both your attack rating and the enemy's defense rating are rolled with 0 as the minimum and their actual rating as a max. IE with an attack of 7 you can do 0 to 7 damage and with a defense of 20 you can prevent 0 to 20 damage. I'm assuming 0s are represented as misses. So no matter how high your defense is there's always the chance of being damaged by a peasant with 1 attack.
In a situation where you have units with 20 def and 7 attack, the average damage reduction is like 60-70% (I did that in my head and have no idea how close I am) which seems normal for a fantasy game character wearing the best armor. I don't think weapons should get much better than that, at least not weapons that can be put onto units with only 5-8 HP.