Click below for more information on the damage resistance changes.
Follow up:
The elemental protections (Fire, Cold, Gas, Acid, Lightning) have all been converted to the matching damage resistance. The reason for this is threefold: standardization, visibility and variability. The old protections reduced damage by a different (read: random) amount for every spell or attack - for example, protection from fire gave 10% reduction to Inferno, 50% to Fireball, and 0% to Incendiary Cloud. In addition to this randomness, the protections were either on or off with no variance or possibility to increase one's protections.
The new system does away with all that. The protection from spells now grant 25% resistance to the matching damage type. All NPCs have had their protections removed and will now rely on their race and templates to reduce damage. Note that items, spells and racial resists all stack. Your current resistance values can be seen via the attribute command.
Equipment can now grant you a variable amount of resistance in all of the new damage types - including the physical ones. A single piece of equipment can grant any amount of resistances to an unlimited number of damage types, including negative resistance. For example, a single item could grant you 5% resistance to fire, 12% resistance to bludgeoning, and -18% resistance to cold.
Equipment that previously granted protections have been automatically converted to now give 10% resistance to the matching damage type. This may change for individual items, and please feel free to post feedback on items you feel should grant more or less resistance.
To prevent your items from being burned by dragon breath, you only need one percent of damage resistance in the appropriate type. Since spells give 25% and items give 10%, this means that if you were already safe you still are.. It's very important to note that it's not your total that is evaluated here, but just the existence of a positive increase. For example, if you a troll with -50% damage resistance, but you are wearing a +1% resist to fire ring, your equipment is protected even though your total fire resistance is -49%.
Again, to be clear, if you have either a spell or at least one item increasing the correct damage resistance by any amount, your equipment will not burn.
To operate on the Plane of Fire or Plane of Magma without taking damage, you also only need at least one point of resistance in the matching damage type. This works exactly the same as items above. The damage on the Plane of Smoke has been removed for now, but may make a reappearance at a later date.