You can come close to 100% in pvm, but a full 100% isn't possible. I thought this worked at first but a few tests of me proved it to be wrong. In PvP you can't even come close to 100% damage reduction.
Your reduction multipliers work like this:
First is your defense/mdefense. Going to take my knight as an example here, she has 5500ish def on her PVM set when buffed (lv50 unrefined brave set), which translates to 68% reduction. So, of the monsters total damage, 32% remains.
After that comes PvP/PvM multipliers. My knight has 50% PvM defense thanks to a brave set and luna accessory set. Of the damage that is left, another 50% gets reduced, lowering the monsters damage to 16%.
Then come the miscellaneous multipliers: Damage reduction stat, enhance damage, crit damage (in case opponent crits). However, as monsters have negligible crit rate and do not have any enhance damage, we don't need to care about these. My knights damage reduction is 55%+133, so another 55% reduction, lowering a monsters damage to 7-8% of its original value. This value then gets reduced by an additional 133.
After putting these stats into a graph, we come to see that all attack values under 1650 get reduced to 0, making this particular set good for running dungeons, since dungeon monsters are plenty in amount but the majority of them have low AP values, making it so this will reduce most attacks to 0. I've run this set in both caves and halls multiple times, and I did not take any damage at all from the normal monsters. Only the captain types, kings, and the imperial berserker statues (second floor of halls) were capable of doing me any damage.
The reason why this is unlikely to happen in PvP is because players aren't so linear in what they're capable of, unlike monsters.
Firstly, there's the possibility of defense pierce, ignoring part of your defense/mdefense reduction. They're also often capable of just flat out lowering your defense stat with def downs.
Secondly, unlike a monster, a player has 10% PvP offense when using an epic/exalted, offsetting your 40% PvP defense to a mere 30%.
And last, players have enhance damage as a stat (at least 15% when buffed, can be higher thanks to gems/passives/class buffs) to go against your damage reduction, and they also have the ability to get a lot of crit, which bypasses the damage reduction mechanic.