Damage determines how much damage a weapon does.  Damage decreases (or increases in the case of head shots) depending on the weapon (gun damage is decreased by the armor your opponent has), the distance from the target and where the player is shot.  Damage may also be based on what weapon is being used as no sniper rifles have 100 points in damage but most of them can reliably kill opponents in one shot (or the stats of each weapon may be releative to its category).