Armor of immunity is one of several types of runic armor. It makes you invulnerable to the attacks of one class of enemy. This includes side effects such as poison, armor corrosion and even theft. It also causes you to reflect any projectile attack from those monsters. For example, an armor of dragon immunity will cause you to reflect a dragon's fire breath, though it will not protect you from fire in general or reflect any fire based attacks from other types of enemies. One notable exception is that monsters thus affected can still grapple and immobilize you, so be careful around those enemies.
This runic ability itself is fixed and will not grow stronger if you enchant the armor.
An armor of immunity will "glow protectively" if worn in the presence of a monster it protects against. Once that monster hits you and does no damage, the runic will fully identify itself.
It's statistically unlikely that an armor of immunity will offer the overall best protection available to you (or otherwise best suit your build) in a given seed. Based upon the class of enemy that the armor grants immunity from, you must decide what’s more valuable: an inventory slot or 100% protection from those particular enemies.