Well I found a little info on the wiki and apparently this has nothing to do with your own current attack damage (which is what I thought it modified) -
Instead it apparently automatically damages any enemy that is attacking you in melee with 100% of whatever your current basic attack damage is regardless of where your own attacks are being targeted.
(thus I assume that this damage would be in addition to your own attacks if you are targeting said creature as well).
I assume that the amount of damage these enemies actually take is still based on their own armor and any other resistances and/or immunities they may have and also assume that this damage would be applied to them every time they strike at you - but do not know if it applies if they swing and miss.

The wiki also mentions a bug related to it where if you are a reaver and have Aura of pain turned on - it counts this as a melee attack against your self and thus adds your weapons basic damage amount to it... ouch
(don't know if this bug has been fixed or not)
If anyone has any additional info it would be welcome...