The Armor Bypass module decreases the defensive bonuses of enemy ships. In order to decrease an enemy defensive bonus, that enemy needs to have a defensive bonus in the first place. For example, an enemy ship with Ablative Armor III has a defensive bonus of +66% against Explosive Damage. Looking at the image below, a ship with Armor Bypass II would reduce this defensive bonus by 30%.
If the enemy ship has no defensive bonuses, the Armor Bypass module will not provide any defense reduction. Most Draconian ships do not have defensive bonuses. As such, the Armor Bypass module will not have a significant effect on those ships in battle.