Your Armor Class (AC) represents how hard it is for opponents to land a solid, damaging blow on you. It's the attack roll result that an opponent needs to achieve to hit you. Your AC is equal to the following:
10 + armor bonus + shield bonus + Dexterity modifier + other modifiers
Note that armor limits your Dexterity bonus, so if you're wearing armor, you might not be able to apply your whole Dexterity bonus to your AC (see Table: Armor and Shields).
Sometimes you can't use your Dexterity bonus (if you have one). If you can't react to a blow, you can't use your Dexterity bonus to AC. If you don't have a Dexterity bonus, your AC does not change.
Other Modifiers
Many other factors modify your AC.
Enhancement Bonuses
Enhancement bonuses apply to your armor to increase the armor bonus it provides.
Deflection Bonus
Magical deflection effects ward off attacks and improve your AC.
Natural Armor
If your race has a tough hide, scales, or thick skin you receive a bonus to your AC.
Dodge Bonuses
Dodge bonuses represent actively avoiding blows. Any situation that denies you your Dexterity bonus also denies you Dodge bonuses. (Wearing armor, however, does not limit these bonuses the way it limits a Dexterity bonus to AC.) Unlike most sorts of bonuses, Dodge bonuses stack with each other.
Table: Size Modifiers
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Size Modifier: You receive a bonus or penalty to your AC based on your size. See Table: Size Modifiers.