Game Mechanics
Master guide to POE2's elemental and status effect mechanics
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Damage in PoE2 is built in a fixed order: base damage, plus flat added damage, then multiplied by your total 'increased/reduced' modifiers (added together into one bucket), then multiplied by each separate 'more/less' modifier, then by attack/cast rate, and finally by critical strikes.
'Increased' and 'reduced' modifiers stack additively: 20% increased Fire and 20% increased Elemental combine to x1.4. 'More' and 'less' modifiers are always multiplicative with everything, including each other: two '20% more' modifiers give x1.44, not x1.4.
Because 'more' multipliers compound, a small number of them is often worth more than a large pile of 'increased' modifiers.
Conversion always proceeds forward along Physical -> Lightning -> Cold -> Fire -> Chaos, never backward.
Skill-inherent conversion is applied first, then global conversion, normalised so you never convert more than 100% of an original type.
Critical PoE2 rule: after conversion, only modifiers to the resulting type apply. If you fully convert Physical to Cold, 'increased Physical Damage' no longer helps - only Cold modifiers do. 'Gain X% as extra [type]' is different: it adds extra damage without removing the source.
Base critical chance is per-skill (for example around 9% for Spark).
The base Critical Damage Bonus is +100%, so a critical strike deals 200% of base damage (double). '+#% to Critical Damage Bonus' scales that bonus multiplicatively.
Crit is a unique final multiplier that is applied independently of your other damage multipliers.
Exposure applies a flat reduction to a single elemental resistance (commonly -20% for a few seconds). Multiple Exposures of the same element do not stack - only the strongest applies; different elements stack independently.
Exposure and curses such as Elemental Weakness stack additively as resistance reductions and can push a resistance negative. Penetration is applied last, after all other resistance modifiers.
Key PoE2 difference: penetration does nothing once effective resistance is 0 or negative. Use exposure and curses to push resistance toward 0, then penetration to finish the gap.