Multi-phase microstructures with high mechanical contrast phases are prone to microscopic damage mechanisms. For ferrite-martensite dual-phase steel, for example, damage mechanisms such as martensite cracking or martensite-ferrite decohesion are activated with deformation, and discussed often in literature in relation to their detrimental role in triggering early failure in specific dual-phase steel grades. However, both the micromechanical processes involved and their direct influence on the macroscopic behavior are quite complex, and a deeper understanding thereof requires systematic analyses. To this end, an experimental-theoretical approach is employed here, focusing on three model dual-phase steel microstructures each deformed in three different strain paths. The micromechanical role of the observed damage mechanisms is investigated in detail by in-situ scanning electron microscopy tests, quantitative damage analyses, and finite element simulations. The comparative analysis reveals the unforeseen conclusion that damage nucleation may have a beneficial mechanical effect in ideally designed dual-phase steel microstructures (with effective crack-arrest mechanisms) through microscopic strain delocalization.