The animation changes to show why you do less damage. There is some logic to it, where your character is meant to change to a "turtling up" stance where only quick thrusts are done while the shield remains in place.
Of course, the effect is ruined by the exaggerated shield movements.
As for gameplay, I think shield defense is extremely useful for tanking, once you do get aggro. Also, keep in mind that +% damage modifiers are additive, which means that using cleave (that grants +100% damage) still adds its full bonus to damage. So while using shield defense and cleave, you still do roughly 175% damage. Using assault in that can is often enough to take and keep aggro.
This is especially true if you prime it with a taunt.
Itkovian