Not only is the visual aspect of "damage" severely lacking in Assetto Corsa, but the physical aspect is bizarre as well. I'm sure we've all come across these: You hit a stationary object head on at 80mph, but you don't flip or anything... But then you try to drive away by you've completely destroyed your front-end. You can have to crank the wheel 120 degrees just to drive straight at 15 mph. If you look at the car with an external camera, besides some scratches and dents and maybe some dirt you'd never know that anything was wrong with the car.
The same thing can be said when you explode a tire. I'm still not 100% sure on how flat tires work in AC. I don't believe you can destroy/flatten your tire hitting someone or something (your steering/front-end suspension might break instead). But, with extremely overheated tires, you can experience a blowout. I've blown front tires where you get that pull like you'd expect, but again...you wouldn't know there's anything wrong with the tire if you were looking at a replay camera.
Which brings me to flipping the car at 150mph (or some other "He's dead" flip or multiple rollover. I've had tires go missing or get bent almost 90 degrees when you break the front end control arms and such...However, I don't believe that those are technically part of a "damage model", but rather, you made the physics engine throw up with the ridiculous forces you must have applied to the car.
Sometime your tire went somewhere else and your front-end is dug into the pavement. You can actually feel the resistance if you try to drive with the car like that. That appears to be another "it clipped through the road surface" type of problem.
All of these need to be fixed. The extremely severe examples don't necessarily bother me as much as the more minor issues, like damage to the car's body, the effect it can have on the car's aerodynamics, or a simple flat tire from getting into a multi-car accident. All of these are very necessary in my opinion. Oh, the broken windshield effect. That is controlled by a simple setting in one of the car's editable data files. I don't feel like looking for it right now, but from what I remember it is purely based on the car's speed at the time of the collision.
If anyone knows more about the damage in Assetto Corsa, please post in here. I would really like to know for sure what's going on. Everything I wrote above is based on things I've experienced and/or spoke to other's about. Luckily, for PC players, there are other damage effects that can be installed just like they're a regular mod. Different broken windshields, for instance. I've often thought of replacing mine with one I've seen that doesn't completely obscure your field of vision. That is the main reason I drive around with damage only set to 10%. I want to know what area of the car I'm affecting when I crash in single player mode, but I don't want to always have to start over a practice session because damage is set to 100%. Getting a completely shattered windshield just because you clipped a guardrail and spun 1/2 thru a Nordschleife run sucks. So, 10% damage for me.
Brandon's video link is hilarious too...The first time I saw it I giggled like a little girl for about 10 minutes. 
