[top]Spell Penetration
While spell hit rating reduces the base chance for a mob to outright resist a spell, spell penetration only reduces the effective magic resistance stat of a target when calculated against the spell. In other words, if a target has 50 magic resist, and the caster has 20 spell penetration, only 30 of the target's magic resist will be counted against the spell.
Since the vast majority of raid bosses have no magic resistance at all,
spell penetration is entirely useless for the vast majority of raid encounters. However, there are a few notable exceptions, such as Supremus in the Black Temple, who has a great deal of fire resistance.
[top]Full Resists
The game interface offers no distinction between a spell that is resisted due to hit chance (or a "miss") and a spell that is resisted due to magic resist. Both events are recorded as a resist in the combat log. Magic resist is a rare stat for mobs, so most resist messages seen are due to hit chance, and not the result of magic resistance.
[top]Partial Resists
A partial resist occurs when your spell only delivers a fraction of its total damage. Partial resists are either the result of magic resistance, or an unavoidable magic resist modifier for targets above the caster's level. Level-based magic resist is counted as 8 magic resist for every level the target is above the caster, meaning a raid boss has 24 magic resistance against all spells. This innate magic resist cannot be countered by any means;
spell penetration does nothing against partial resists caused by level difference.
[top]Binary Spells
Certain spells are considered "binary" and cannot be partially resisted under any circumstance. These spells are usually tied closely to an essential debuff. Most spells are not binary,
Frostbolt and
Mind Flay being the notable exceptions. Binary spells are also exempt from the innate magic resist counted for targets of higher level than the caster.