Penetration is a key number for determining the damage done to armored vehicles. Once you determine if you hit the AFV and where you struck it (front turret or whatever) you compare the Pen number to the armor for that spot on the AFV.
You also might have to add a die roll and possibly make some other calculations, based on the type of round, range, and/or for special types of armor (spaced, composite, or reactive). Once you do these calculations and get the final penetration value you then determine the extent of damage. Generally if the Pen is higher than the armor value the round will do some damage.
I don't know which version you are playing, but in my v2.2 rulebook the Penetration info is back around Page 216 and the damage charts are on 218.
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