More specifically, how does armor affect MAGIC damage taken? And, does it depend on the location you take the hit in?

Ty.

Magic goes straight through armor I believe. Resists are what prevent magic damage. Such as a Nord race having 50% protection against cold attacks. Or elemental resist potions. Alteration spells giving resist. So on and so forth...

Location does not matter. It does not matter with arrows either, but if an arrow hits your shield and you have a perk for it, it deflects the arrow. Even then, an enemy that shot me in my head still caused damage since it didn't hit my shield. No head shots giving extra damage though.

But ya, resists are for Magic damage and armor for Physical damage.

If you have both light and heavy armor types equipped, how does the levelling work then with regards to damage taken? Hit location still doesnt matter?

anyone? Bumpity bump bump mcgoo.

Armor only prevents physical damage. You can absorb a maximum of 80% of physical damage dealt to you, no matter how much armor you have (even if you have 10,000 armor rating). Magic resistance; however can be maxed out to 100%. If you take points in Alteration perks and enchant your gear you can be 100% immune to magic.