Referees assign situational modifiers. For example, we'd assign a higher penalty if you're trying to complete a complex move in your attack, or if you're defending from a position of weakness. Armor and weapons have their own "factors" for causing or preventing damage, so they really don't enter into modifying rolls - they're involved in handling the final outcome.
We tend to discourage a lot of OOC griping during the scene about modifiers, because it can break the flow of a good scene. But we do handle questions via private page conversations and, sure, referees have been known to change their initial call based on a quick and rational discussion with the players involved.
Further, some conflicts are handled entirely without a referee, with the players themselves serving as referees and inflicting damage on themselves as needed.
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