In the description, Elemental Armor is supposed to increase defense by 10 shields but it doesn't actually appear to do that. It's increased resistance to chaos magic does appear to work though. So what gives? Am I misunderstanding the documentation or is this a bug?

SPELLBOOK:
Dramatically improves a target unit’s defenses (shields) and
resistance TO MAGIC (crosses), by 10 each.

"To magic" refers to both resistance and shields. Elemental armor does nothing for defense against melee attacks, however, when you're attacked by a damage spell or magical attack, it gives you +10 shields, which is not bad.
(Although, evidently, if you're attacked with a Psionic blast, the EA is useless.)