Quoth the Gygax:
Armor Class - A number representing the relative protection from harm the character will enjoy. This includes type of armor, dexterity bonuses or penalties, magical protections, etc.
Hit Points - The number of points of damage a creature can sustain before death (or optionally, coma), reflecting the creature’s physical endurance, fighting experience, skill, or luck.
Armor, along with the use of a shield, is the basis for determination of how easily a character can be struck by an opponent's weapon. Other factors modify this, of course. Dexterity and magical effects are the two principal modifiers.
Do not confuse armor which is worn with the armor class (AC) rating of a monster. Although a creature might be given a very high armor class because of its exceptionally thick hide, armor plating, chitinous exoskeleton, or the like, other factors are considered in such ratings. For example, the size of the creature, its speed, its agility, and perhaps its supernatural (extra-dimensional or multi-planed existence) aspects are considered in the armor class of all non-human type monsters. Therefore, a monster with an armor class of 2 will not be carrying a shield.
The type of armor worn, the inclusion of a shield, magical factors, and dexterity are inclusions in overall armor class. The size ratio is also important at times, i.e. a dwarf adds 4 factors to his armor class if his opponent is a giant. For example, splint mail is armor class 4, and if a shield is added the armor class becomes 3, but suppose it is a magical + 1 shield; then armor class becomes 2. Now assume that the character has a displacer cloak, so the armor class becomes 0, and furthermore, because the character has a 16 dexterity, a final bonus of +2 is given, and the
armor class of this character is -2. If the character is a dwarf, a giant attempting to hit him or her would have to hit AC -6, because of the size differential penalty.
Damage scored to characters or certain monsters is actually not substantially physical - a mere nick or scratch until the lost handful of hit points are considered - it is a matter of wearing away the endurance, the luck, the magical protections. With respect to most monsters such damage is, in fact, more physically substantial although as with adjustments in armor class rating for speed and agility, there are also similar additions in hit points.
All quotes from the AD&D core rulebooks. That being said, I'll never understand what Gary was thinking when he made each combat round last a minute.