2why it is so strong
Flat defense subtracts a fixed amount off the top. This cuts a share of whatever is left afterward, which means it gets better the harder the hit. Against chip damage it barely registers. Against the things that actually kill you later on, a Golem fist or a Moon Lord beam, it removes a real chunk that no amount of stacked defense would have caught.
It also multiplies against the other reduction sources rather than adding to them. Layer it under a defensive set bonus and a potion and the survivable ceiling climbs a long way, though each source you add is worth a little less than the one before.
against the crimson version
The Brain of Confusion is the offensive answer: dodges and a damage window instead of a steady cut. If single large hits are what kill you, or you play a class that has to stand still to do anything, take the scarf. If you already dodge well and want the crit uptime, the brain wins the slot. This one is Corruption only, so on a Crimson world you are trading for it or generating a second world.