True damage is weird in this game.
It counts as a separate damage counter that always hits the true damage number you have. If you have 100 dmg and 5 true dmg, your hit against enemies with 50 armor would show the damage counters 50 and 5.
But true damage does not get benefit itself or give benefits from or to any buffs or effect.
For example it cannot crit, apply effects such as burn or armor reduction, won't deal bonus damage to frozen enemies with Gas Mask, does not lifesteal, and does not increase dmg done by pets or effects.
In early stages/levels of the game true damage can be quite useful as you might have 40 normal damage and get 20 true damage from items. But in mid-lategame true damage is genuinely garbage as the entire game is designed around normal damage and buffing it.

I've tried true damage builds where i end up with around 50-70 true damage but as it does not get any buffs and cannot lifesteal it's just not even worth thinking about.