Street Cred: As of writing this I have a lvl 60 witch doctor, currently alive in Hell Act 4. Progressed entirely solo to this point. Also played Diablo 2 hardcore ladder off and on for 6+ years. This will be WD centric but should apply fairly well to other classes.
First we need to understand EHP. If you understand EHP feel free to skip the first part.
Effective Hit Points (EHP): Effective Hit Points is a calculated life total that factors in damage reduction. It can be calculated if you know your Hit Points (HP) and Damage Reduction (DR) with the formula HP / (1 - DR) = EHP.
Frank, A Witch Doctor with 10000 HP and 70% damage reduction will have 10000 / (1 - .7) = 33333.33 (repeating of course) Effective Hit Points.
Sally, A Witch Doctor with 20000 HP and 10% damage reduction will have 25000 / (1 - .1) = 22222.22 Effective Hit Points.
From the 2 examples above you can see why HP is not a very useful stat alone. Sally has twice the HP of Frank, but Frank can take over 11k more damage before dying.
Why weren't effective hit points all that important in Diablo 2? They were, but no one really had to think about it. Everyone knew you needed to have max resists. As resists had a relatively easy cap to reach, EHP calculations never factored into the average Hell difficulty hardcore players gear choices. More HP or more resists wasnt the question. How much HP with max resists was the question.
Damage Reduction: Resist All, %damage reduction, % less damage from elites, and Armor are all forms of damage reduction.
Healing, Diablo 2 vs Diablo 3:
Diablo 2 healing came from 2 primary sources. Lifesteal and Full Rejuv potions. Full Rejuv potions had no cooldown and provided 100% HP healing. If you have 1k hp they healed for 1k. If you had 4k hp they healed for 4k. More hp = more heal.
Diablo 3 healing is a mix of % health based healing and flat amount healing. The templar heals for 2000. Healing Journey rune heals for 7% max health. Potions heal for a flat amount. Lifesteal and life per second items all provide flat healing.
TLDR, The Point: When deciding how to gear and raise your EHP the first consideration you should make is "What is my primary source of healing?". If you are loaded with % based healing then you might want to consider favoring Vitality over Damage Reduction. If you are loaded with flat healing you might want to consider favoring Damage Reduction over Vitality.
A player with high damage reduction gets more effective healing from flat sources than a player with low damage reduction.
You may have noticed once you got up to 40k hp that suddenly your healing potions are useless. But what if you instead got the same EHP by focusing on damage reduction at the cost of HP? Now your potions heal for a higher percent of your health and the monsters still do the same damage.
Lastly, most classes can stack damage reduction and offense at the same time (Intelligence, Strength, Dexterity (for monks with the right passive)). This is very important when considering your stat budget.
I hope this helps a few people with their gear choices.