Paladin Defense Guide

Each point of +Defense skill adds:
+ 0.04% to be missed
+ 0.04% to Parry
+ 0.04% to Dodge
+ 0.04% to Block
- 0.04 to be affected by a critical hit
Thus +25 Defense = +1% to Parry, Dodge and Block, -1% to be affected by a crit and +1% to be missed.
Remember that miss and dodge chances works against physical and magic attacks while dodge and block only on physical ones.
Moreover decreases the chance of being affected by a "crushing blow". Creatures (not players) that are higher 3 or more levels than your character can land crushing blows that deal increased (150%) melee damage. Now you understand why that damned 63 elite Molten Destroyer in Molten Core hit a lot harder than that 62 elite Molten Giant >_^
Each point of defense will decrease the chance of being affected by a Crushing Blow by 2%. However this percentage will be added only if your actual defense is under your level cap (level * 5 so 300 max at 60). The minimum percentage of crushing blow is 15% so… stay away from level 63 mobs :P

So calculating our defenses we have:

Dodge chance [%] = Agility / 20 + (Defense * 0,04)

Block chance [%] = 5 - (Level * 5 - base defense)*0.04 + (global defense – character defense)*0.04

Parry chance [%] = 5 - (Level * 5 - base defense)*0.04 + (global defense – character defense)*0.04

The base defense is your level based unbuffed value.Is the one you see increase every level by five points and its capped at 300 at level 60. Global defense is your base defense + defense from items and is the one you see in your character sheet in game.
Block and parry chance can be raised from talents (redoubt and holy shield for block and deflection for parry) and items.
Defence can be raised from anticipation talent (up to ten) and items.

+% to Hit

Your +X% to hit is directly subtracted from your miss rate, as stated from blizzard developers.

+ x% Spell Hit

Increases chances that a spell will affect successfully your target. When a spell is casted the game performs 2 checks.
The first is based on level difference from you and your target. So if your target is
Same level 96%
1 lvl higher 95%
2 lvls higher 94%
3 lvls higher 83% on mobs 87% on players
4 lvls higher 72% on mobs 80% on players
and so on…
your +x% spell hit affects directly these chances. The second check done by the game is based on resistences. If you want to know more about this give a sight at the following magic resistances section.