It means that they have an inherent 4% per level of amarr cruiser bonus to resists. So with amarr cruiser V a 0% armor resist would be 20% instead. It doesn’t affect resistance modules you put on the ship.
ships have an attribute that is the resonance, it is (100+resist%)/ 100 : with -20% resist you have 0.8 resonance. This attribute is the one actually used in game (but it is shown as “resist” for the ease of reading)
When you take 100 EM damage and have remaining shield HP, the engine looks at your ship’s EM resonance (say 0.8 : 20% resist), multiplies 100 by that value (=> 80) and removes it from the layer HP. If you had 50 HP in shield remaining, the remain(30HP) is then redistributed to the underlying layer : in that case 100(=base damage)×30(=remaining after reduction)/80(=applied after reduction) = 37.5 damage go back to the armor as EM damage.
The SoE ships actually have a multiplication on their armor resonances, by (100-4×skillevel)/100
When you undock the ship,
its internal basic 4 resist attribute is multiplied by your skill level (postmul operator);
the modified value is applied to the ship resonance (with postpercent operator).