The wiki has a whole section on armor which is kind of complicated, but here's the gist:
Armor has coverage and protection, coverage is determined by the type of armor while protection is more from the material. It also has different layers, from under, over, armor and cover. You can have one clothing item on each body part (head, torso, legs, feet, hands) for each layer (4 layers), and more layers is more protective than fewer (obviously).
So for example, hands would be best protected if they had gloves (under), gauntlets (armor), and mittens (cover). Naturally, it will take a bit of time to completely suit up your dwarves though, so if you need to armor them up pronto, you may want to start with the important stuff like chain shirts and helmets, which as far as I know offer the best survivability boost for their material cost...
here's the thread if you want to look at it yourself:
http://dwarffortresswiki.org/index.php/DF2014:ArmorIron is good enough for most things, so you shouldn't need to forge tons of steel unless you really want to prepare for the absolute worst, like a forgotten beast made of stone or an encounter with a flock of dragons (no, as far as I know dragons don't actually come in flocks, but that would be awesome)...