I am assuming that it means that a DoT's full damage total will be reduced by the same % amount that a nuke or melee attack would be. How this is implemented, I'm not sure, but I am guessing that it would reduce the damage from each tick by X amount.

But it's a bit confusing. First it says that it no longer reduces the amount of damage from DoTs, which implies that DoTs are no longer affected. Then it says that it reduces the amount of all damage done by the same proportion. Since DoTs are damage, I assume it would reduce the damage they do. Then again I'm not sure how it is handled now, are DoTs subject to a different reduction mechanism than direct damage?

Edit- aren't there warlock talents that allow some of their DoT damage to crit? Or am I thinking of something else?