There is no good answer for why the Iron Man armor provides both the level of protection that it does (it has resisted blows from Thor's hammer and the fists of the Hulk, for example) without transferring any of that damage to the more fragile body of Tony Stark beneath the armor.
In the example below, Iron Man is wearing one of his Hulkbuster armors, which were heavier and provided better protection than his mainstream armors. But even his mainstream armors are capable of taking an incredible amount of physical punishment before failing.
Early armors (the first grey, and later gold armor, the Mark I and Mark II) appeared to function like plate mail, an armor over another armor, they were large enough and bulky enough for there to be an (undisclosed) under-padding that should have provided some insulation against physical damage. But by the time the first red and gold armors were being seen, there was simply not enough armor left to explain how the suit provided blunt force trama reduction against the enemies Iron Man was fighting.
So we we're left to decide exactly how his armor did provide protection. The briefcase armor, for example was able to fit in a briefcase and did claim to possess an anti-gravity emitter making it able to be carried, since back then, the armor did have some weight to it. It was the boots, gloves and helmet. Tony wore the breastplate and shorts under his street clothes. This was still during the era when Tony could not take off the armor without risk of dying.
The golden armor was stored inside the boots and gloves. It extruded and connected with the central power core in the breastplate. Once charged, the armor was filled with an electromagnetic repulsive force that hardened the suit making it a suit of armor. Perhaps it is this repulsive force (as well as the gravity emitter that was used in the briefcase technology) that made the armor capable of resisting damage with any form of under armor and added to its flight stability; basically it was an armor-assisted invisible force-field.
To be fair to the writers of the time, none of these things were important enough to dwell on, this was the era of the "transistor-powered" armors and "transistor powered, energy generating" roller skates used in several stories. The writers then weren't significantly saavy with technology and transistors to know they didn't power ANYTHING... We knew what they were trying to accomplish and hand-waved it through.
This hand-waving has continued on into today's writing where we talk about the Extremis armor and its nanotechnological makeup.