Two things:
This does sound right, however, if you increase your damage by 500%, and then by another 100, you effectively increase your damage x6.
What you understand is the damage after the first 500% is your total damage, so another 100% bonus damage will increase your damage by only 20%. As far as this is right, this is also wrong, because if you’ll look at this that way, you should not care about getting more than 1000% bonus to a damage type but instead getting RR. RR is most effective with high % to a damage type. With 100 base damage, 500% increase and 100% RR you deal 1k damage to a target with 0% resist, with 100 base damage, 2000% and 75% RR you deal 3500 damage. So, this is what you understand, you effectively lose damage, but!, what if I tell you you can actually achieve both in one? This is, you can get massive % damage and RR. When I make my builds, I firstly try to search what damage type I’ll focus on, which set will I take and then equip it on a dry character to then check my RR. Here, no matter what I do, I end up with at least 1500% damage increase and mostly over 90% RR.
I do agree that RR is way better, however, it’s not that RR will compensate your lack of % damage. The example I made above (100% RR and 500% damage and 75% RR and 2000% damage) literally shows the idea of importance of % damage increase. Furthermore, some enemies have no RR at all (theoretically, 18% is not that much tbh), so casting only one RR skill will increase your damage by a way greater amount than just applying RR, which may have a chance to apply if you use devotions.
Now, let’s say you’re a fire-based build. You only have Elemental Storm and Eldritch Fire. Effectively, 20% chance of applying both at a time (let’s just flatter that, ES has 25% chance and EF 15%), so let’s say after 5 hits you apply both, for a total of 55% RR (enemy has 0% resist):
Let’s say we hit 6 times,
100 base damage, 500% increase = 2500 damage with all 5 hits, and then 775 damage after RR, for a total of 3275 damage,
100 base damage, 2000% increase = 10000 damage with all 5 hits, and let’s say we have only Eldritch Fire (23% RR), so we hit for another 2460 damage, for a total of 12460 damage.
Now, let’s say the enemy has 55% resist, first example deals 1125 damage with all 5 hits, and then deals another 500 damage, for a total of 1625 damage, while the other one hits for 4500 with all 5 hits and 640 with the sixth hit.
I believe you already knew about all that. My point is that no matter how much %RR you get, you won’t deal as much damage even with less RR as only with RR. The more RR and %damage you get, the more damage you do and there’s nothing like diminishing returns no matter how you look at this. % damage only loses it’s weight if you don’t have RR, if you have RR but don’t have % damage, RR loses it’s weight (the same thing is with eating, you don’t eat because food is prepared, you eat only when you’re hungry - eating when you’re stuffed will have diminishing returns, same as preparing the food and cooking it when you’re not hungry at all).