Because your skills profit from buffs/debuffs. Can crit and all. The Lostmauth bonus (and comparable companion bonuses doing X% Magnitude damage) just give the flat damage number as damage (which still gets resisted by the enemy defense/can get reflected)
You have to avoid the breath and activate it after the breath from outside to remove the ice cloud. BUT after the last patch on ps4 it actually don't work anymore. I always used white, because no one does and it makes a big difference. But since 16.3. (17.3.) it won't work anymore. Avoid breath, activate soul gem next to…
That's because it's a damage increase, not a power increase. These aren't reflected in the character sheet. Tyrant weapons, rusted boots etc. aren't reflected either, but they do increase your damage.