Armor Class

Armor protects its wearer from attacks. The Armor (and shield) you wear determines your base Armor Class (AC) -- the number an opponent must beat in order to hit you with an attack.
Armor Class is further modified by your Dexterity and any spell effects currently targeting you.

Monster Armor Class

A monster that wears Armor or carries a Shield has an Armor Class that takes its armor, shield, and Dexterity into account. Otherwise, a monster's AC is based on its Dexterity modifier and natural armor, if any. If a monster has natural armor, wears armor, or carries a shield, this is noted in parentheses after its AC value.