Considering all of this, what's the reasoning behind Daedric being one of the absolute best armor types?
Daedric armor is made by the soul of a Daedra being pulled from Oblivion and bound into a piece of armor. Much like a less-potent version of the Daedric artifacts given to you by the princes if you complete their shrine quests. Lore-wise, the armor/weapon made will be of varying quality depending on the strength of the Daedra that was bound, but that would be hard to implement from a gameplay perspective. As you can probably imagine though, a piece of armor made from the soul of an immortal creature tends to be pretty high-quality