After doing some testing I think I have figured out how the WKN mitigation works. I am sure others figured it out already and I am just on the slowbus but it seems that the physical mitigation is specific to physical type attacks (not damage). While the magical mitigation is specific to magical type damage.

What this translates to is him recieving no mitigation to attacks like Malboro's Tentacle attacks that are magical type attacks but physical damage. A side effect that many don't seem to notice(because there aren't any notable enemies with this type of attack) is he recieves double mitigation from attacks that are physical type but deal magical damage. I he uses Steel and is attacked by a rogue enemy using sunbeam he should only take 6.5% damage.

This should be a relatively simple thing for Gumi to fix(although they probably never will) as they just have to switch the magical mitigation to affect magic type attacks instead of magic damage. This would allow him to have even mitigation but still have it not affect fixed type attacks.