It has to do with the number of nodes on the ship's Damage Control screen. When you set the grid damage you are damaging specific nodes, so if a ship has two torpedo nodes and one is 100% damaged then the ship's torpedo systems will be operating at 50%.
"Damn the torpedoes! Four bells, Captain Drayton!"
(Likely actual words of Admiral David Farragut, USN, at the battle of Mobile Bay. Four bells was the signal for the engine room to make full steam ahead).