When a feature refers to incoming damage, it’s describing the damage amount a target is currently receiving. For example, the dwarves’ “Increased Fortitude” feature allows a PC to spend 3 Hope to halve incoming physical damage. This means that the GM tells the player how much damage their PC is taking from an attack. The player can then decide to spend 3 Hope to take half as much damage instead. If the player wanted to do this again on an additional attack, they’d need to spend another 3 Hope.