Damage ratio, also known as Damage % in Super Smash Bros. and Launch Rate in Super Smash Bros. 4, is a feature in all four Super Smash Bros. games that alters how much knockback is given and received (despite the name, damage is unaffected). All knockback in a match is multiplied by the damage ratio value, which by default is 1.0 but can be set from as low as 0.5 (attacks have half knockback) to as high as 2.0 (attacks have double knockback). The minimal damage ratio is ideal for combos while the maximum damage ratio is ideal for OHKOs. In Smash 4, attacks that deal set knockback are unaffected by changes to the damage ratio, allowing those attacks to still combo into each other.
Damage ratio is not to be confused with handicap, which is another feature that increases/decreases knockback, but in an entirely different way.
There has been some discussion amongst Brawl's competitive community as to whether using a damage ratio value other than the default 1.0 results in a more healthy metagame; 1.1 is a commonly-mentioned value claimed to make many polarizing attack chains (such as using Sheik's forward tilt into itself endlessly) less viable while also shortening the length of stocks (one of Brawl's most derided properties). The idea however has never attained serious consideration amongst tournament organizers.