Hi Peter,
In terms of how LS-DYNA considers energy balance after element erosion, I will refer you to the link below where more information is available.
https://www.dynasupport.com/howtos/general/total-energy
However, for your specific case, it appears to me that due to localized deformation (via shear banding, for example), a layer of elements in the projectile satisfies the condition for element erosion while the surrounding material is still below the threshold for erosion. As a result, a part of the projectile (shown with red circle) is detached and travels through the target. I think by setting enmass to 1, this issue could be resolved and it hopefully be better in line with what happens in reality.
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