The most common damage-type on Tibia.
Almost all creatures cause it. When you attack with any weapon (Axe, Club, Sword, Distance) or some spells, you cause physical damage.
This kind of damage is often used by knights and paladins. In addition mages use it frequently when killing lesser creatures. Physical damage is affected by the victim's armor value.
Explosion runes are the only runes left that cause Physical Damage since Winter Update 2007.
Almost every piece of armor has Armor Rating (Arm:X). The damage reduced is between half the total armor and your total armor minus one, where only pairs of two armor ratings have any effect. So on average Armor Rating blocks a bit less then 0.75 damage... Equipment with high armor rating have been superseded by Physical Protection in most cases.
Physical Protection is better than Armor rating, because Physical Protection works in percents of the whole damage and is rounded up to a whole number, this means that 1% physical protection always blocks atleast 1 dmg while 1 armor rating has an average of a bit less then 0.75 damage blocked.
1%: 1 dmg received, 1 dmg blocked; 101 dmg received, 2 dmg blocked.
2%: 1 dmg received, 1 dmg blocked; 51 dmg received, 2 dmg blocked.
1%+1%: 2 dmg received, 2 dmg blocked, 102 dmg received, 4 dmg blocked.
The following equipment reduces damage taken from Physical Damage: