Armor is rated in 6 categories: I, IIA, II, IIIA, III, and IV. I stops only very small caliber bullets, while IV stops even armor-piercing incendiary .30 caliber magnum bullets. It may also have an additional rating of "M" (such as IIIA-M) which gives protection against melee weapons and bows. The exception is Level III and Level IV which always protect against melee weapons. Thrown weapons, except exceptionally large or fast ones, are stopped by armor regardless of rating.
A vest may stop a threat higher than its threat rating, but such a hit destroys the protection of the vest if it uses a soft or ceramic ballistic panel. If it uses a metal panel, you got lucky. This only works for shots of 1 category better (ex. Level II threat versus Level IIA vest). Even if it does not stop the attack, the vest may reduce the damage. In any case, the armor is destroyed and must be replaced.
Even if a vest does stop an attack, the armor panel must be replaced if it is struck. Continuous use of damaged armor panels may result in complete failure of the vest even by inferior threats. In game terms, this won't happen unless it's used in successive combats, and any vest will be able to stop at least 2 hits that it is rated for, even if they happen in successive battles. After two battles in which the vest is hit by a rated threat (Level IIIA vest getting hit by Level IIIA bullets), the vest must be repaired and the ballistic panels must be replaced. Vests can still be damaged even by inferior threats, but it takes many more hits and a lot more time. Vests can also be damaged by maltreatment, but this is rare as they are expected to be used in combat areas where they get caught or torn slightly by underbrush.
Slashing melee weapons usually destroy a vest if the vest is not rated for melee attacks. However, the vest will partially resist (typically -5 or -10 damage, depending on the vest) the first attack. If the slashing attack is stopped by this partial resistance, it does not destroy the vest, but a second hit will even if it does not deal damage.
Example 1: A character is wearing a soft concealable vest (+3 armor bonus) of Level II rating. His armor gives its +3 armor bonus against Level II and lower threats. It may stop a Level IIIA threat, but the vest will be destroyed. A Level III threat will penetrate the vest and do full damage, but won't destroy the vest (punches a clean hole). Against a sword, the vest is basically worthless, but will subtract 5 damage from the first hit it takes.
Damage to a vest only applies if the attack hits the defender's Touch AC (or shield AC, if using a shield); in other cases, the attack misses, hits cover, or is deflected by a shield.
Magic armor (including armor given temporary enhancement bonuses by magic) is rated for all threats (even those that bypass Level IV armor) and will not be damaged unless a sunder attempt is made. Even then, the armor has hardness 5 higher than normal.
Concealable vest: +3 armor bonus, Max Dex +8. ACP -0. Counts as light armor.
Concealable vests can come in any category. Any vest with a rigid ballistic panel (metal, ceramic, etc.) has an ACP of +6 and has a +2 bonus on Spot checks to detect it. Vests without a panel are rated Level I. Vests with soft panels can be rated anywhere from IIA (inferior quality) to IIIA (best quality). Vests with rigid panels can be rated anywhere from IIIA-M (cheap or improvised) to IV-M.
Tactical armor: +5 armor bonus, Max Dex +3, ACP -4. Counts as medium armor for proficiency, but does not reduce speed unless the user is unproficient.
Tactical armor is always at least Level IIIA. If it has rigid panels, it can be rated up to IV-M.
Heavy tactical armor: +7 armor bonus, Max Dex +1, ACP -6. This counts as heavy armor. Always at least rated Level III-M.
Light shields are usually improvised and give a +1 shield bonus against melee weapons, thrown weapons, arrows, and some magical projectiles. They do not generally provide protection against bullets unless enchanted.
Commercial heavy shields are typically riot shields and give a +2 armor bonus. They are made out of laminated polycarbonate or carbon fiber and are generally stronger than a Level IV threat, making them effective against all reasonable threats. Due to their shape, they can be used as total cover if crouched behind. Medieval large shields don't enjoy this tactic (including any conjured by spells), and may not be effective against Level IV threats (though they are generally made of hardened steel and can stop Level III threats).