All party or raid members within 30 yards, excluding the Paladin, take 20% reduced damage for 6 sec.
Divine Guardian is a talent in the Protection tree, you will need to spend 21 points in Protection to max it.
As of Patch 3.3.0 The raid wide damage reduction from the Divine Guardian talent is a seperate buff from Divine Sacrifice. If Divine Sacrifice ends early or is cancelled by the caster, the damage reduction from Divine Guardian will continue for the normal duration.
As of patch 3.1.0 this talent increases the duration of Sacred Shield by 50/100% and the amount absorbed by 10/20%. This includes the increase of duration in both the main Sacred Shield buff, to 45/60 seconds, and the damage absorbing buff, to 9/12 seconds. The Sacred Shield will still be able to proc every 6 seconds.
Patch 3.3.0 (08-Dec-2009): This talent no longer increases the amount of damage transferred to the paladin from Divine Sacrifice. Instead it causes all raid and party members to take 10/20% reduced damage while Divine Sacrifice is active.
Patch 3.1.0 (14-Apr-2009): Now increases the effectiveness of Divine Sacrifice by an additional 5/10%, and increases the duration of Sacred Shield by 50/100% and the amount absorbed by 10/20%.