i seriously thought you couldnt,

you can perplex any value, Speed, Attack, Defence, Damage, or Range up or down

Things you can perplex (ie Combat Values):
Speed
Attack
Defense
Damage
Range

Things you can't perplex:

Point Value of a Character
Damage DEALT
Number of Targets

Things to remember:
The Rule of 3 refers to individual values. You can perplex damage value on an RCE or CCE figure, but only by 1, since they are already gaining a +2 by virtue of their powers.
However, you could perplex damage by 1, attack by 3, and movement by 3 (provided you had 7 perplexers with LOS!) on an RCE figure.

Can you explain what you mean by perplexing damage but not damage dealt?

Also... what is the point of perplexing defense. I thought that only lasted during your turn. Wouldn't the effect wear off by the time the character was attacket? Or is that only for perplexing down defense of an opposing character?

Thank you.

Basically, the rule of 3 explains both things.
You can only raise or lower a Combat Value by 3. A number of powers can modify the Damage Value (Perplex, RCE, CCE, Enhancement, SHIELD TA), but the maximum increase over the printed value is 3, basically. However, things like Critical Hits and Objects in close combat increases the Damage Dealt, so with them you can bypass the rule of 3. (Even though I personally think that the rule of 3 should be applied to objects...)
As for perplexing defense, there are a number of reasons to do so. You could increase the defense of one of your own figs that stands to take damage from an Energy Explosion or Pulse Wave attack to increase their chances of avoiding the attack, for example. Or, you could lower the defense of an enemy fig to increase the chance of hitting them. You can't raise AV by more than 3, after all, but if you raise the attackers AV by 3 and lower the defenders Defense with three, you've basically increased you chance to hit with 6 points!
...or it could simply be that you for one reason or other have line of sight to the defender but not the attacker...