The text for this ability is a little misleading, it's based on how damaged you are, not on how much damage you've actually taken.

Let's say you have 2000 HP and pop discerning eye, then you take a total of 4k damage, but are healed back to full each time you're hit, then discerning eye will do nothing.

Now let's say you only took 1500 total but no heals, you're now 75% damaged, you should see a significant boost to your attack. Not sure if it's simply % based, or if it's based off of the total points of hp lost, or for that matter how much attack you get in return. It would probably take a great deal of parsing to find these values out.