I have never understood or found any answer to how to use your AC. Is it something the GM have to keep in mind all the time to reduce or add damage to specific players based on how high their AC is, is it something you can use to calculate and reduce the damage received to a player, or is it just a number displaying what sort of defensive items you have on you? If so, why do you have to use armour and shields?
This is written in both the player's handbook and even the player's basic rules, in the respective chapter about Combat. I suggest you read either of these.
From the basic rules, page 73 (emphasis mine, identical text is found in the PHB):
When you make an attack, your attack roll determines whether the attack hits or misses. To make an attack roll, roll a d20 and add the appropriate modifiers. If the total of the roll plus modifiers equals or exceeds the target’s Armor Class (AC), the attack hits. The AC of a character is determined at character creation, whereas the AC of a monster is in its stat block.
AC is effectively the difficulty class (DC) for attack rolls and thus determines how hard you are to hit with melee and ranged attacks in combat.
Armour and shields are components of your AC. AC is simply a measure of how hard it is to strike a figure in a way that does damage. It might be partly how good you are at dodging, or completely made up from physical or magical protection. In the end all that matters is whether you avoided a being struck or not, so it's all boiled down to one number. Damage reduction is a different thing.