This has been driving me crazy as I've been trying to create monsters and NPCs for my characters to encounter in D&D 5th Edition. Say I've got an NPC with 48 hit points and Armor Class 16. That would put it in the hp range for Challenge Rating ¼. The instructions say, "If your monster's AC is at least two points higher or lower than that number, adjust the challenge rating suggested by its hit points up or down by 1 for every 2 points of difference." The suggested AC for a CR ¼ monster is 13, so I'm supposed to raise the CR by 1. But what does that mean? Raise it by 1, the numeric value, or raise it by one step? In other words, is its defensive CR ½ or 1¼?
Let's say for the sake of argument that it's CR ½. Let's also say that this NPC does an average of 21 points of damage per round and has an attack modifier of +6. The dmg/rd value is in the range for CR 3; the attack modifier suggests that I should adjust the CR upward by 1, for an offensive CR of 4.
And now I'm supposed to average the defensive and offensive CRs to get the final CR. Am I supposed to average the values: (½ + 4) ÷ 2 = 2¼, rounded down to 2? Or am I supposed to average the steps, choosing CR 2 because it's halfway between CR ½ and CR 4 on the table? (The result is the same in this case, but it often isn't when one of the recommended CRs is 0, 1/8 or ¼.)