DEF Power determines the DEF (defense) deck cost you can support. When creating a DEF deck, your deck cost cannot exceed your current maximum DEF Power Points.
During PvP (Person vs Person) Battles you will select one of the 4 DEF decks to defend against your opponent's ATK deck. Since you do not know who or when someone will attack, it is harder to determine the 'best' deck. Certain defensive Skills can give boosts to all other cards in your DEF deck while others only modify itself.
You can create 3 separate decks, while a 4th Recommended Deck is automatically created for you. The Recommended deck will make sense early on as it will keep adjusting your DEF deck to maximize your defense potential while you collect more cards from the Friendship Points' Free Card Pack or from questing, but later one, you will want to use your own pre-built decks for different situations. The 'Recomended' deck does not always take into account card Skills or Battle Formation bonuses that you might want to use.