Armor does have a cap, but not diminishing returns.
Armor calculation is not technically for damage reduction, it is for effective health, which is then translated by the client into a damage reduction value on the UI because most players find that easier to understand.
Armor has completely linear scaling until you hit the 75% cap and then it goes flat. There is no curve, it does not diminish.
250 Armor will always give the same amount of added effective health at the same character level as another 250 Armor, until you hit cap.
Going from 5000 to 5250 or going from 10000 to 10250 or going from 15000 to 15250 gives the same increased effective health amount. It will do so until you hardcap. This is linear increase, not diminishing returns.