Defense Mitigates incoming damage or to say it another way.

Defense tries to reduce the incoming damage you hero would take.

Defense doesn't out right stop damage.

In order to out right stop damage, you need block damage buff.

Just what Player J said.

Also you may find our series of introductory videos "RAID 101" helpful.

In particular, I suggest to take a look at this one: 

No. There is a nifty equation that transforms the defence number into % damage mitigation.

→ Having X defence means incoming damage will get reduced by Y%.

And due to how the equation is set up, damage mitigation never exceeds 85%. So even if you had a billion defence, you'd still take damage.

It also depends on the content you're playing, for instance Clan boss teams ( save for unkillable teams ) can benefit more from stacking defense as opposed to HP, on teh other hand if you're going up against enemies that ignore defense ( for example Dwarves Faction wars 21 boss ) HP becomes more valuable.