How Damage Works
Path of Exile is a game about killing stuff. To kill stuff, you must deal damage to stuff. And to deal damage to stuff, you must know how damage works in PoE's system.
In PoE, each point of damage you deal has a couple of attributes attached to it that determine what kind of modifiers and bonuses affect it. In brief, each point of damage has:
- A Damage Source: usually, an Attack or a Spell (note that in PoE's language, Attacks are not Spells - the general term is "Skill"). Sometimes damage is also dealt as Damage Over Time (which, by default, is not considered either an Attack or a Spell, even if it was applied by one), or, more rarely, Secondary damage that does not count as any of the above. There are no specific Secondary damage bonuses, but Secondary damage can still be increased in other ways (including through its Type or Tags; see below). Each point of damage has one, and only one, one Damage Source.
- A Damage Type: Physical, Fire, Cold, Lightning, or Chaos. The term "Elemental" means "Fire, Cold, or Lightning" (but not Physical or Chaos). Note that it is possible for a Spell to deal Physical Damage or for an Attack to deal Cold damage - the type of damage and the source of damage are not in any way related to one another. Since most weapons default to doing Physical damage, most Attacks deal at least partially Physical damage unless otherwise noted. Each point of damage has one and exactly one Damage Type.
- Optionally, one or more Damage Tags: Unlike Sources and Types, a skill can have more than one of these. There are many possible tags, but common examples are Area damage dealt to everything in a particular region, Projectile damage applied by a, well, projectile, Minion if dealt by a minion, and so on. A point of damage may have more than one tag - for example, if applied by an exploding projectile, it may be both Projectile damage and Area damage. (One note: damage caused by Bows always has the Projectile damage tag, regardless of whether the skill actually fires a true Projectile.)
Damage combines all three of these characteristics: a point of damage might be Attack Damage, Cold Damage, and Area Damage, for example, or be Damage Over Time, Chaos Damage, and not have any special damage tags. Bonuses that require certain sources, types, or tags will apply only to the damage you deal that satisfies those conditions. The tags listed on skills in-game are good guides - but not absolute rules - as to what tags are attached to the damage they deal. For example, the skill Righteous Fire has the Spell tag, but does not deal Spell Damage (it deals Damage Over Time instead).
Note that while each point of damage has only one source and only one type, it is possible for a skill to deal damage with various types. For example, if you use a weapon that deals both Physical and Cold damage, your Attacks with that weapon will (by default) deal both types, with bonuses to Cold damage applying only to the Cold portion, bonuses to Physical damage applying only to the Physical portion, and bonuses to Attacks applying to both.
It is also possible, albeit somewhat rarer, for a skill to split its damage between Sources. For example, Essence Drain fires a projectile that impacts for Spell-sourced damage, then leaves a Damage Over Time effect.
Some skills and items override these normal rules. For example, Blight deals Damage Over Time, but specifically overrides the normal rules to allow Spell Damage modifiers to apply to it.
How It Works In Practice
Suppose I am using a weapon that deals 10-20 Physical Damage and 50-60 Cold Damage. I use an Attack that deals damage in an Area, but does not fire a Projectile. In the language above, all my damage has the source Attack and the tag Area; some of it has the type Physical and some of it has the type Cold.
My equipment and passives provide 50% Increased Physical Damage, 20% Increased Cold Damage, 30% Increased Area Damage, and 50% Increased Projectile Damage. (Note that 'Increased' is a keyword with a very specific meaning in Path of Exile, which we'll get to later.)
The Physical damage I deal with my Attack benefits from the 50% Increased Physical Damage and the 30% Increased Area Damage, because it is Physical, Attack, Area Damage. But because it is not Cold or Projectile damage, it does not benefit from my 20% Increased Cold Damage or my 50% Increased Projectile Damage. As a result, I have a total of 80% Increased damage for the physical portion of my hit, and I deal my original 10-20 Physical damage increased by 80% for a total of 18-36 Physical damage.
The Cold damage I deal with my Attack, on the other hand, benefits from my 20% Increased Cold Damage and my 30% Increased Area Damage, because it is Cold, Attack, Area Damage. But because it is not Physical or Projectile damage, it does not benefit from my 50% Increased Physical Damage or my 50% Increased Projectile Damage. As a result, I have a total of 50% Increased damage for the cold portion of my hit, and I deal my original 50-60 Cold damage increased by 50% for a total of 75-90 Cold damage.
In total, I do 18-36 Physical and 75-90 Cold damage. If my opponent has, say, resistance to Cold damage, there might be further calculations later.
Damage from Hits (not from Damage over Time) in Path of Exile can be Converted from one Type (Physical, Fire, Cold, Lightning, or Chaos) to another. Many skills do so as part of their effect (particularly Physical to other type conversions), as do a few items. If, for example, I would deal 100 Physical damage normally, but I have "30% of Physical Damage Converted to Cold" on one of my items, I would deal 70 Physical and 30 Cold damage instead.
Converted damage is affected by the attacker's modifiers to both its original damage type and to its new one. For example, Physical damage converted to Cold damage is affected by modifiers both to Physical and to Cold damage. Modifiers on the defender apply only to the final type (for example, Cold Resistance will reduce Physical Damage converted to Cold, but not Cold Damage converted to Fire).
Damage that is worded as "Added As" or "Extra" works the same way - it just doesn't reduce the amount you're doing of the original type. In the example above, if I had "Gain 30% of Physical Damage as Extra Cold Damage" on an item, my original 100 Physical would become 100 Physical and 30 Cold instead. As with conversions, this Extra Cold Damage would be affected by the attacker's modifiers both to Physical and to Cold.
(Technical note: a few effects modify the type of damage taken, usually with the language "X% of TypeA damage taken as TypeB". This is technically not conversion, and has some differences from the above - for example, taken-as modifiers can affect damage over time. Most builds don't need to worry about this.)