It lowers your AC, but only while you're standing in it?
And it lowers your AC regardless of whether you're wearing metal armor, leather armor, or have draconic scales or mage armor or unarmored defense?
The idea, which is consistent with earlier BG/similar games, is that acid causes erosion on your amor.
IIRC the effect used to be limited to actual armor. However, in BG3, Mage Armor and its variations (Draconic is just a variation of Mage Armor) are equivalent to a magically conjured alternative to the actual metal/non-metal armor. They are all technically the same. As a result of this, I guess, acid has to have the same effect on both physical and magical armor. In other words, it affects AC, regardless where you get your AC from.
The only weird thing about this in BG3 is that the acid covering does not travel with whoever gets caught with the acid. In other words, the weird thing is that acid has a clearly defined range! Well, it's acid - something like water - its effect should be like the wet effect of water - they all should stay for a while with whoever get them.
Anyway, acid-based attack in this game is pretty much meaningless in this game (perhaps except on one occasion when acid is used as a deterrent).
In comparison, in BG2, acid attack is rare (not as rare as in BG3), but whenever it is used again the player party, it can - on more than a few occasions - kill player characters in no time.
