Here are the two schools of thought:
1) Reduced damage from Melee / Ranged attacks only applies to physical damage attacks. (For example ranged would decrease an arrow's damage and melee a close physical attack)
2) Every attack is categorized as either Melee / Ranged and the reduction applies to all damage of that type. (For Example firebomb would be ranged reduction)
I think the answer is number 2, and if that is the case, I'm wondering what is melee and what is ranged? Is Desecrator, Molten, and Plague Melee while Arcane Sentry is ranged? Anyone know for sure? Please don't answer with a non tested or non documented guess.