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Force travels through solid objects at roughly the speed of sound in that object, if you force a piece of an object to move at greater than the speed of sound through that medium it will simply tear whatever is holding it together without transmitting force to the surrounding structure. this gives a kind of hole punch effect if the projectile is moving faster than the speed of sound in the target. the maximum known speed of sound is about 15km/s in diamond, given that a dreaddie shot moves at about 4000Km/s it is safe to assume that armor ain't going to do shit. given the momentum behind the small slug it should remain above the speed of sound in diamond until (20Kg*4000Km/s/15km/s) the total mass of matter it has punched through reaches 5.3 tonnes.
Second, things heat up when they are compressed as given by the perfect gas law (at these energy densities it is close enough for our purposes despite everything bieng solid) so when the projectile gets compressed it heats up, if it heats up to the correct level it melts, vaporizes and turns into plasma, that depends on the energy densities present (FUSION).
So when a solid slug hits the armour the first thing which will happen is that the slug punches a hole clean through the armour, no if's, no buts. Then the pressure wave begins to propagate through both the armour chunk which has been torn out and the projectile, the amount of pressure in this wave is so immensely fuckhuge that the matter instantly becomes plasma shortly followed by becoming a nucular fireball. the only question left is how far does the projectile reach inside the ship until you can stop modelling it as a projectile and have to start modelling it as a nuke. the irony here is that armour essentially contains the fireball inside the vessel instead of keeping it on the outside.
This is also why whipple shields are effective,