The easiest way I can think of putting it would be..
For beginners explanation - Every complete armor set (And custom made ones) will give you so many points towards an effect that you can use.
Like with speed sharpening you can sharpen a weapon with one swipe instead of four. (Faster)
If the armor does not give you the effect by not giving enough points towards it, you can make gems that will give you the points if there are SLOTS on it to be attached.
(Some weapons have slots also).
That's BASICALLY it, and now to charms.
Charms have their own individual slot and can be almost OP. (And some can have slots also!)
Simply you gather them randomly from gathering and other quests. (Rewards etc).
They have the ability to give you a higher amount of points towards an effect for your armor rather than a gem.
Be warned that even though both Gems and Charms put points towards certain effects, they can detract points for other effects. Choose wisely and plan it out! (-20%Health = BAAAAAD)
The trick in mind for armor can be.. " Put aside the idea of defense for now, focus on getting armors with effects that are useful to my weapon choice or goal for certain quests!"
(Real hunters never get hit!)
Sorry this is VERY long winded and there will be many who may contend with certain details but that's basically what it's all about. It is very important, but the learning curve is gentle and you'll be glad you got used to it.
Hope it helps you, and GOOD HUNT!! *Raises flagon
P.S. An example for effects beginner blade masters may want..
Speed Sharpening, Sharpness +1, Health +20/50, Sheathe.