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A unit with mossbody has a 75% chance to reduce incoming damage by 15 points, whenever it takes damage. This effect applies after protection as well as physical and elemental resistances. If -15 damage is insufficient to reduce the damage to zero, the moss "pops" into a small poison cloud, and the spell effect is over.
Counterintuitively, mossbody can protect against elemental and armor negating damage, such as that from Mind Burn.