There is flanking in the game already. A -10 defense penalty per character around one character. It does show up on the UI.
Absorb does mean armour, it means that much was resisted harmlessly.
There don't seem to be stats for resistances to different types of physical damage. I'm not sure if that's coming or not. Perhaps they didn't add that because it would overcomplicate combat?
Not sure about blunt weapons.
Weapons do have different reach distances, but I don't think there's penalties for being too close with polearms.
