What is EHP?
EHP is a number that is used to explain the value of your hit points with all damage reduction added in. This number will be quite larger than your HP as it is the overall worth of all your defensive abilities in conjunction with your Health Pool.
How does it work?
EHP takes your life, and divides it by your dmg reduction abilities to show how much your total HP pool is worth with the defensive modifiers taken into account.
Can I have an Example?
Sure! These numbers will be very low/dumbed down just to show an example. Let's say you have these total stats: 10,000HP, 10% Damage Reduction from Armor (this can be seen by hovering over your armor stat). You are hit for 10,000 damage, yet you do not die? Why is this? Due to EHP! Since incoming dmg is reduced by 10%(armor) coming in, that 10,000 dmg hit is now actually only a 9,000 HP hit on you. You will survive with 1,000HP. To actually kill you, you will need to be hit for 11,111.11 Damage. Simple? Well not when we start getting into all the reductions.
TotalArmor / ((50*(Creature Level)) + TotalArmor)
This calculated the reduction of dmg from Armor. Creature level for MP1+ is 63. It should match up to the number on your profile.
Resist/10 Int Reduction:
TotalResist / ((5*(Creature Level)) + TotalResist)
This calculated the reduction of dmg from Resists. Creature level for MP1+ is 63. It should match up to the number on your profile.
Dexterity is a crazy one:
Dex < 100 = .1
Dex 100 through 500 = .025
Dex 500- 1000 = .02
Dex 1000-8000 = .01
This makes Dodge hard to get the higher you get in Dex. What these numbers are, your dex 1-100 is only worth .1% dodge. This means you'll have 10% Dodge at 100 dex. Each point from then on till 500 is worth 1/4th that, or .025% dodge. At 500 Dex you will have 20% dodge (400*.025 + 100*.1). Etc. It is possible to max out dodge to 100%, but requires 8,000 Dodge which is unreachable.
.3 if you're Barb or Monk
TotalHealthPool / (1-Armor Reduction)*(1-Resist Reduction)*(1-DodgeReduction)*(1-Any other dmg reduction you want)
This show that the dmg reduction is multiplicative and not additive. Why is this important? Due to the fact that if you get 80% armor reduction, and 20% Resist reduction, you aren't immune to all dmg. Again why is this important? That'll take us to our next section.
Stat balancing is quite complicated due to the fact that there can be so many factors into the defensive reductions. Example: Talents for physical dmg reductions, Elite Dmg reduction, Melee Dmg reduction, etc. The best way to calculate your stat weights are to use a EHP calculator. I'll post some at the bottom.
So how do we balance our stats? The main stat that everything is balanced from is your Health Pool. This is the main driver for our EHP as we gain more reduction, it is multiplied by our health pool. This is why most people strive to get a minimum of 30k HP, so as to get a good base for their dmg reduction stats. However, there are some builds that go for a low HP, high Dmg Reduction with lots of LOH / Life Per Sec. These builds are viable, but you need an excess of dmg reduction to achieve this due to a low HP multiplier.
Some key balancing statistics. Everyone always says 10armor = 1 resist all. This is actually 99% false. The only time this is true is when you have exactly 10Xmore armor than resists. To keep a good armor to resist balance you want to keep armor as close to 10 times your resists as possible. This is due to the fact that it keeps one stat from vastly out weighing another.
What does this all mean?
This means that when you switch out an item with 50 vitality, for one with 80 res all, that's not always going to be an upgrade. If you have a low amount of one stat or another, it is often stronger to up that lower stat, than to up one that you already have an abundance of.
For those of you that played WOW, Diminishing Returns was something you always had to worry about in defensive stats. In Diablo3 it doesn't work the same way. Diminishing Returns do not exist the way we usually think of them. We will use Armor for this example. As you gain armor, it takes more Armor to gain 1% of Damage Reduction. However, every piece of armor is gaining you significantly more EHP. Therefore, though the amount of Damage Reduction you get out of each piece of armor is lower, the actual EHP you get out of each piece is higher. A good example of this can be seen here:
What are some tools I cane use?
There are a bunch of tools for calculating EHP efficiently. All will be a few points off depending on where they do rounding, how they are weighting extra stats, if they are verse lvl 60 or 63 mobs, etc.
Http://www.unyieldingvalor.com/D3/calcTool.php - This my tool and so I try and keep it always updated as much as possible for Wizards as that is the class I play. Any information, questions, or comments can be directed towards me for this. http://www.d3up.com - Another tool that allows for using the API to load your character and retrieve EHP info. I think they are over-valuing dodge, but other than that they pretty much run the same formulas as me so there shouldn't be a ton of difference. http://diiicalc.appspot.com/CharacterFind -This was one of the first ones, and allows you to use team mate buffs like Warcry from barbs and Monk auras. It is only using lvl 60 mobs so it isn't updated for patch 1.0.5 currently, but the numbers should only change a bit due to that. http://rubensayshi.github.com/d3-ehp-calculator/#intro - Manually inputed ehp calculator that gives you lots of details information on your stat values. Lots of Bang for the buck.