Because you aren't doing math. You're using a representative value to gauge the true value of a statistic.
Think about it this way:
As far as damage reduction goes, 0-100% is not as 'small' as it seems. Its not just 0 to 100. Its 0 to infinity. You are using the values 0 to 100 to represent 0 to infinity, which is not really accurate. If you look at the actual values, which is +1% total health vs physical damage per point of armor, its linear. Entirely linear, and based off of the amount of health you have.
1 point of armor is +1% effective health vs physical damage. 2 points of armor is +2% effective health vs physical damage. This continues on even past 1000, where 1000 points of armor is +1000% effective health vs physical damage.
That is called linear scaling.
Also, if you have 0 armor, +%10 reduction means you are taking .9 of the damage you would take (100 x .9=90 damage). If you are at 50% reduction, +10% reduction is actually .8 of the damage you would have taken prior (100 x .5=50 damage-> 100 x .6 is 40 damage, which is 80% of the value of 50). Yeah, each % of reduction is twice as hard to get, but it also has twice the effect. After 66% reduction, it is then three times as hard to get, but 3 times as effective. 75%+ is 4 times as hard to get, but 4 times as effective. At 80%+, a 1% increase in damage reduction is 5 times as hard to get, but each 1% increase is 5x as effective.
Each 100 armor brings you up one 'tier', in that regard. 0=0% reduction (100% EHP). 100=50% reduction (200% EHP). 200=66% reduction (300% EHP). 300=75% reduction (400% EHP). 400=80% reduction (500% EHP).
This is the damage reduction that your EHP represents. Notice how you get the exact same increase in EHP per point of armor, even though it appears that your damage reduction is increasing by less.
It is, in fact, linear. Not diminishing.
What you're thinking of is % increase of your total EHP. Normally you have 100% effective health as a base. 10 armor makes that 110% effective health vs physical damage. To increase this by another 10%, you would have to purchase 11 points of armor, leaving you at 121% EHP. To increase by another 10%, you'd need 12 more points of armor, so on and so forth.
If you have 5 apples and buy another 5 (+100%), that doesn't mean you have to then buy 10 (+100%) to get the same value. Each apple is still worth just as much as the next. You using % values to measure your increase in apples doesn't somehow make each apple worth less just because it doesn't provide as much of a boost to your % apple intake with each flat increase in apples you make in purchases.