Grazing hit

Similar to how an attack roll of a natural 20 is a hit regardless of the target's Armor Class, DDO allows attacks to deal reduced damage instead of missing entirely if the total attack roll isn't enough to hit. These are called a Grazing Hits.

The Grazing hit does damage only equal to the base damage of the weapon (such as 1d8 for a longsword) minus any Strength penalties. Damage bonuses from feats, Strength, magic weapons, and other sources do not apply to Grazing hits. Grazing hits won't work if the attacker is not proficient with the weapon, and PCs can't get them with offhand weapons.
 * Players score grazing hits on any attack which is not a natural 1
 * Monsters need various rolls depending on the difficulty setting of the quest:
 * 19 Solo/Casual or Normal
 * 17-19 on Hard
 * 15-19 on Elite.

Grazing hits are subject to Damage Reduction as usual, which can frequently reduce them to zero damage. There are additional sources of reduction to Grazing hit damage:
 * Player characters automatically take half as much Grazing hit damage as monsters do.
 * Wearing a buckler or light shield, or having the Shield spell on you, reduces Grazing hit damage by 10%. A heavy shield reduces it by 25%. A tower shield reduces it by 50%.
 * Centered monks get a cumulative 10% reduction to incoming Grazing hit damage every 4 levels.

Grazing hits have their own combat log message and a special icon for heads-up damage display.

Presently Sneak Attack damage is added to Grazing hits, although that is at odds with developer announcements.

Before Update 14
Player characters get a Grazing hit on misses where the natural roll is 10-19. Monsters need various rolls depending on the difficulty setting of the quest: 19 on Solo, 17-19 on Normal, 15-19 on Hard, and 13-19 on Elite. The Grazing hit does damage only equal to the base damage of the weapon (such as 1d8 for a longsword) minus any Strength penalties. Damage bonuses from feats, Strength, magic weapons, and other sources do not apply to Grazing hits. Grazing hits won't work if the attacker is not proficient with the weapon, and PCs can't get them with offhand weapons.

Developer introduction (out of date): http://forums.ddo.com/showthread.php?t=188041