I'm probably misunderstanding somthing but... When i make a new character i see that i can make steel armor vs iron. Why is it that the only difference between the two is around 15 armor rating? Why should i even bother upgrading as well? If the cap is 567 (85% damage reduction) Doesn't this make armor pointless?

Also: Is there any reason to block with a shield if you are at the armor cap? (not at the cap but its the only way i can ask)

*shrug*
probably because bethesda didn't want gameplay to be too gear dependent im guessing.