Undeath works by giving you a unique source of damage reduction that scales based upon how injured you are up to 30%.
For example when you are not injured at all the passive sits at 0% mitigation, it gives you nothing, but if you're at 50% of your max health it will be at 15%. 15% is half of 30%.
The closer you get to dying the more mitigation you get out of it, but you'll never seen the full 30% mitigation till you're sitting at 0% HP, aka you're dead.
Tanks typically sit at max health for as long as they can so they have the biggest buffer for incoming damage. Undeath in the hands of a tank is typically rarely a factor, but it will help defend against follow up attacks after blocking a high powered heavy attack.
Another issue of Undeath is since it's a unique form of mitigation it suffers diminishing returns.
Block, CP damage reduction stars, base 10% mitigation, resistances, Major and Minor Protection, and other forms of mitigation all will make this passive less effective on its own.
In addition to the post above, Undeath gives what could be called "clutch mitigation" mitigation that makes you deceptively hard to kill.
When you pair it with critical resist it has a compounding and dynamic (yes that is what is happening with those two particular defensive bonuses) effect on your resistance to burst damage. Math
Assumptions:
20% is the amount of undeath mitigation at 33% health
180% crit damage is a very common value for an enemy player to have
30k health is a benchmark for a competitive build
lets say with base crit resist you get hit with a 10k crit (6250 damage before crit)
If you were at 33 percent health on a competitive build with no impen or vamp 3 you would die from that.
With vamp 3, at that threshold that burst gets cut down to 8k
5 impen traits gives about 10% crit resist lowering that 10k crit to 9375
If you have 5 impen traits and vamp 3 at 33% health the damage of that crit gets knocked down to 7500 damage (.8 x 6250 base damage x vamp mitigation)(1.8-.3 crit damage - crit resist)
If you had 10k health, you now have 2.5k health left to potentially roll away and heal up.
With just those 2 defensive choices you get 25% mitigation on that clutch moment that would have killed any player that didn't make those choices in their build. These 2 choices cost negligible damage (defensive armor traits, sustain penalty for vamp 3)
On a build that already has overcapped resists, both protections, evasion, resolves, defensive sets, etc... crit resist and undeath bonuses aren't that significant and even come at an opportunity cost (less sustain, less block bonuses or standard resists). That build might have only been on the receiving end of a 5k crit in that example (if they weren't blocking, which they would be) and the difference between 5k and 3750 is literally half of the difference between 10k and 7.5k.
Where these defensive bonuses come in super handy is when you are a damage dealer looking to get the most survivability for the smallest drop in damage. When the goal isn't to fight toe to toe but survive the one shot so you can reset and try again.
TL;DR: it's special mitigation for pvp damage dealers to make their huge damage viable. For best results, pair with crit resist. A build that focuses on defense at the expense of damage won't get more than half the value that a damage dealer does out of crit resist or vamp 3, the bonuses can even be detrimental to their build. Because of how potent it is in enabling squishy damage dealers it is important that this passive exists as it does to protect the last dozen or so squishies playing through this meta.