Returning to this post where you have the numbers written out for more clarity.
The "damage mitigation strength" is a linear progression and can be constructed as exactly the same equation as MP/SP. Can we simply agree to not call that "diminishing returns"?
The "PRR damage reduction" is not linear, yes, and that equation certainly has diminishing returns.
The question now becomes which of them captures the effect on survivability. The answer is the "damage mitigation strength" and not the "PRR damage reduction". Thus the effect of PRR is linear.
A way to explain it is that the benefit of damage reduction is not linear. Getting +1% additional damage reduction is better the more you already have. The best example is comparing going from 0%->1% damage reduction vs going from 99%->100% damage reduction. The first is marginal at best while the second makes you completely invulnerable.
This is how dodge works (and why there is a cap at 95%) and a big reason why boosting dodge is so powerful. Increasing dodge by 50% from 30% to 80% (imp. uncanny dodge) means you remove over 70% of the attacks that would have otherwise hit you.
The PRR formula factors this in and turns the increasing return into a linear return.
Diminishing returns is described as when input no longer achieves a productive output. I don’t think anyone is disputing the actual facts, but the way you are conveying these facts with terms was not accurate. That’s where I got confused to be honest. The same could be said how you keep calling the data points linear. They are not as compared to opportunity investment.
Incremental returns is a term where the result outweighs the investment value. This is not the same thing as incremental gains however. It is simply saying a small investment can produce a large reward and is a relative term, not linear.
Dimishing return is where the investment or input begins to outweigh the results. The apex of diminishing return should be the goal is known as maximum yield.
Negative returns is where the investment or input far outweighs the results.
So none of these terms, even negative, assumes there is no incremental gains, but more relative to the opportunity cost.
Additionally no one spreadsheet can definitively say in DDO what dimishing returns would be, without further defining the goals of those investments.
So for example a tank would have a much higher tolerance for diminishing returns with regards to PRR, than say a range character. This is relative to the opportunity cost vs the end result desired. But in economics, every scenario has to be defined with one of these three terms.
As far as linear (this term is used to express graphed results) is concerned, yes the data points as a percentage of damage reduction can be expressed in a graph in a linear line. But not including that opportunity cost to compare makes this linear discussion largely irrelevant, since no resource is finite. This is where the PRR progression becomes non-linear.
So maybe the terms are inaccurate, but I think everyone is on the same page as far as the math?