Note that the excluded on-hits will sometimes not apply the armor shred. If they're triggered by Guinsoo's Rageblade they will however always apply it. Runaan's Hurricane will also apply the shred to the main target since it deals them 0 physical damage on-hit.
The very first instance of physical damage does not get the benefit of the armor reduction. The physical damage dealt is calculated first, and the debuff is applied after. This means the full benefit of the reduction is seen on the seventh hit, after all six stacks have been applied.
Black Cleaver is usually used on juggernauts (Illaoi, Darius, Garen) because they can easily apply stacks and survive long enough to benefit from the penetration.
Armor reduction and penetration effects stack, allowing an attacking character to benefit simultaneously from Black Cleaver shred, penetration runes, other items such as Last Whisper, and champion abilities that circumvent armor.
Black Cleaver and Obsidian Cleaver are among a number of items that had the word "The" removed from their names in patch V9.19. They were previously known as The Black Cleaver and The Obsidan Cleaver respectively.
Unique Passive - Carve: Dealing physical damage to an enemy champion reduces their armor by 4% for 6 seconds, stacking up to 6 times for a maximum of 24%. Enemies with 6 stacks are Shredded.
Unique Passive - Butcher: Basic attacks (on-hit) and damaging abilities against fully Shredded enemies deal bonus physical damage equal to 5% of their missing health, reduced to 2% of their missing health for damage over time effects (0.5 second cooldown).
Unique Passive: Dealing physical damage to an enemy champion Cleaves them, reducing their armor by 4% for 6 seconds, stacking up to 6 times for a maximum of 24%.
Unique Passive - Rage: Dealing physical damage grants ( 20 / 10) movement speed for 2 seconds. Assists on Cleaved enemy champions or kills on any unit grant ( 60 / 30) movement speed for 2 seconds instead.
Revised Passive: Dealing physical damage to an enemy champion Cleaves them, reducing their armor by 5% for 6 seconds, stacking up to 6 times.
The passive is now unique.
New Unique Passive:Rage: Dealing physical damage grants 20 movement speed for 2 seconds. Assists on Cleaved enemy champions or kills on any unit grant 60 movement speed for 2 seconds instead. This movement speed is halved for ranged champions.