So does it mean that using just the honor gear and zodiac pets is useless without other skills - there will be no reduction in damage whatsoever?
no, it actually means the opposite. (random numbers incoming) for example, if you have 10% damage reduction, you will take 90% of the full damage. if you have another 10% damage reduction added multiplicatively, you take 0.9*0.9 of full damage, or 81% of full damage. from this, we can see that your first "10%" damage reduction buff is doing the full 10%, while any subsequent buff will do a smaller raw magnitude of reduction based on the full damage (essentially you are taking a constant fraction of an ever decreasing total).
in essence, if you only consider the numerical reduction, you start to see diminishing returns as you buff to higher reduction values.
i'm not sure how good of an explanation this is, but i gave it a shot.