I redefined some variables, I think is more legible this way:

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--[[Things to do:
Declare variables first within a function
Make things more fun and complex
Points System:
OLD: Atk -{1,2,3} +{4,5} Def +{1,2,3} -{4,5}
NEW: Atk -{4,5} +{4,5} Def +{1,2,3} -{1,2,3}
Any better ways? Maybe make Atk more risky, so it's less about luck]]--

chance = { [-1] = "",
            [0] = "unsuccessful . -",
            [1] = "successful . +" }

action = { nothing="", attack="Attack", defense="Defense"}

function initialize_variables()
    v = 0
    t = 0
    r1 = 0
    r2 = -1
    state = action.nothing
end

--function on.create()
initialize_variables()
--end

function on.paint(gc)
    gc:setFont("sansserif","r",11)
    gc:setColorRGB(0,0,0)
   
    gc:drawString("[A]tk or [D]ef?    [R]eset",10,10,"top")
    gc:drawString(v,10,30,"top")

    if state == action.attack then
        gc:drawString("Attack was "  .. chance[r2] .. r1, 10, 50, "top")
    elseif state == action.defense then
        gc:drawString("Defense was " .. chance[r2] .. r1, 10, 50, "top")
    end

    gc:drawString("Turn " .. t,200,10,"top")
    if v~=0 or t~=0 then
        gc:drawString("Average " .. round(v/t,2), 200, 30, "top")
    end
    gc:setFont("sansserif","r",8)
    gc:drawString("Numstrat - Jason Ho",10,200,"top")
end

function on.charIn(ch)
    if ch=="a" then
        state = action.attack
        r1=math.random(4,5)
        r2=math.random(0,1)
        if r2==1 then
            v=v+r1
        else    --if r2==0 then
            v=v-r1
        end
        t=t+1
    end

    elseif ch=="d" then
        state = action.defense
        r1=math.random(1,3)
        r2=math.random(0,1)
        if r2==1 then
            v=v+r1
        else    --if r2==0 then
            v=v-r1
        end
        state=action.defense
        t=t+1
    end

    elseif ch=="r" then
        initialize_variables()
    end

    platform.window:invalidate()
end

function round(value, digits)
    return string.format("%." .. digits .. "f", value)
end