If players are within 4 levels of each other, experience is worth 100%. Starting at 5+ levels apart, experience decreases by 10% each level until it reaches 10+ levels apart, it then decreases by 95%.
Example: a level 1 being boosted by a level 60 will still receive 5% XP per monster kill.
However, if you legitimately kill monsters in a more difficult act with friends your own level (or solo) you receive the full amount of XP.
No solid citations yet, sorry.
The formula in question seems to be:
DR = Ak/(1+Ak) where A = armor, k = 1/(50*moblevel)
So, for example, at level 5, with 100 armor, fighting level 5 mobs,
100*.004/(1+[100*.004]), or .4/1.4, or roughly 28%.
Fighting level 10 mobs, this changes to
100*.002/(1+[100*.004]), or .2/1.2, or roughly 16%.
Thus, when you gain a level, without increasing your armor, the character sheets displayed damage reduction shrinks slightly, since 'equal level mobs' are better able to penetrate your armor. Among other things, this means that there's no DR involved here, Armor just keeps getting better, the more of it you have.
Best Answer
An updated to this post, since it not accurate anymore:
As of 1.0.7, the experience bonus gained from Monter Power level as been change to the following and everything is additive:
Source
For the next patch 1.0.8, Blizzard said Valor Stacks will be multiplicative, like the 10% bonus gained for every other players in a multiplayer game (hence limited to 30%):
Source