Hit chance is the chance of an attack to do physical damage. Accuracy and Equipment (aim) can increase a players adjusted Accuracy. Defense decreases your opponents chance to hit you. An opponent with higher levels of accuracy will have a higher hit chance and an opponent with higher defense will decrease your chance to hit them.
Magic Damage follows its own set of rules and ignores hit chance. Aim on mage staff or orb is for that part of your attack that is melee.
Archery Damage follows its own set of rules also and needs no Accuracy skill points.