Attack,defense,accuracy,dodge and damage

Simply put, accuracy/dodge determines how likely you are to hit, and if you do hit then attack/defense determine how much damage you do. If you have 10 attack against a guy with 10 defense, you can think of it as two rolls of 1-10, and the damage you do is your attack roll minus his defense roll. It's a little more complicated than that though, they have a way of weighting the rolls towards higher numbers, so you'll see 10 more often than 1 (last I heard I think they were using a sqrt(roll*10) formula. It keeps changing though, so that information is probably outdated).

Anyway if the attack is completely canceled out by defense, you'll see it was "blocked" (as opposed to "dodged", which means your accuracy vs. dodge roll failed). The end result is that when attack is equal to defense, most but not all of the damage will get canceled out by defense.

More or less....

Accuracy vs Dodge - > Do I hit?

If I hit...

Attack vs Defense - > How much damage I do (if any)

Also, dodge vs accuracy appears to be a straight-up "chances of result" type of thing.  Basically, if you have 15 accuracy versus 5 dodge, you have a 3-in-4 chance of scoring a hit.  Dodge is pretty weak overall, unless you cheese Guardian Aura to get ridiculous amounts of dodge (read: over a thousand, in which case an enemy with accuracy 20 has a 1-in-51 chance of hitting you).

Defense on the other hand is pretty strong since it's a straight subtraction. Roll attack, roll defense, subtraction one from the other. Assuming equal amounts of both, you have a 50% chance of avoiding damage just from defense.

It also means that defense scales far far better than attack or dodge. For instance, attack 10 v defense 7. Assuming max rolls, that's 3 damage. But if you get up to 100 attack and 97 defense, that's still 3 damage... but you're also much more likely to beat the attack roll.