I'm interested in this as well. As mentioned in
this topic, the damage formula is normally
floor((attack_strength - armor) * damage_multiplier). The formula you posted is related to splash damage, but its misplaced (future note to self, location is
XML/Unit) and may not necessarily be accurate (I should have cited the source).
In the previously linked topic, Softcoder's posted code basically says the damage from splash is
(damage / (distance + 1) - armour) * damage multiplier. The actual code says:
damage += random.randRange(-var, var);
damage /= distance+1;
damage -= armor;
damage *= damageMultiplier;
Damage is the value of the attack strength, plus or minus a random variance. It's then divided by distance plus one and subtracted by armour before being multiplied by the damage multiplier. This means the LaTeX code on the wiki is slightly incorrect. The armour shouldn't be subtracted from the distance + 1, but rather it should be subtracted from the divisor of the attack strength over distance plus one.
If I can get confirmation as to these two formulas as being correct, I'll update the wiki's formulas (and make them easier to find, they're way too buried).