Damage (Dam) Current weapon, character race (race table) and STR (DmBin table primary stat effects) all effect the value of Dam.
The calculation for Dam is:
Class bonus + DmB + Weapon damage + Skill damage
In addition, for every 4 levels of fighting expertise (physique experience category level) 1+(Dmb/5)) is added to Dam. Some skills (namely the hand-to-hand, or martial arts skills) can add significant damage to the overall total. The amount that is added depends on the user's level in that skill. Note that weapon damage is automatically added to your damage rating in the stat window when you wield any weapon.