Defense determines how likely a monster is to hit another monsters, the higher the monsters defense the better chance it had to dodge incoming attacks. Defense ranges from 1 to 10, ten being the highest defense possible.
Defense does not work against item attacks.
Class advantages do effect the likelyhood that an attack will miss. A level 10 with no advantage or disadvantage will be hit 50% of the time, however a level 7 with a class advantage will have the same dodge percent.
A monster with 1 defense and a class disadvantage is not capable of dodging.