We never outlined specific amounts of gear that is, or isn't, allowed to be equipped but imagine this to work much like most of the Final Fantasy games. One set of armor, one or two weapons can be used at the same time if the character is capable of fighting in an ambidextrous manner (though they may carry more) and probably no more than two accessories at a time.
Regarding how this factors into damage rolls, all equipment, unless they have some special property (such as casting protect and/or shell on the wearer then the wearer would automatically be able to adjust their damage roll by -1 for the protect spell and -1 for the shell spell) will be treated normally. This is due to the fact that as armor strength increases, it means the characters will be able to take on more and more powerful monsters, which we whole-heartedly, be throwing your way.