Armor / Spell Resistance Penetration
There are two hidden stats in ESO called Armor Penetration and Spell Resistance Penetration. These stats determine how much Armor or Spell Resist that your abilities and damage ignores when attacking a target.
So 1000 Armor Penetration means that your Physical Damage ignores 1000 Armor on the target. If the target only had 1000 Armor to begin with than your attacks won’t be mitigated at all.