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EXP. If you stand there and take damage over and over and over, healing through it or someway of not dying, you'll notice your repair cost does not go up (therefore, durability of any single piece isn't going down). You kill that thing though and it gives EXP, you attain a repair cost. Regardless of if you get hit by it, mind you. Say you 1-shot something that gives you EXP, you gain a repair cost as armour durability dropped even though you weren't hit. If you don't gain EXP from something you kill though (say first-zone mobs while you're level 50), you don't incur a cost. You must earn EXP to incur a cost and loss of durability.
I personally hate this system of durability. You're getting taxed regardless of your skill to avoid damage.
I have some additons:
When you get xp by killing other players in PvP areas, your armour doesn't take damage.
If you are killed by an npc your armour takes extra damage.
Edited by lolo_01b16_ESO on November 22, 2015 12:49PM