Taken from Bot command on discord:
Calculating Weapon Damage:
Modifiers for weapon damage are applied as follows:
1: Ethereal Bonus (50% base damage on weapon)
2: %Enhanced Damage (%ED)
3: +Flat Damage.
4: %Physical Damage, this includes %EWD from items, %damage from skills / passives and buffs and str/dex factor, which are all ADDED up into one big multiplier (%dmg = %EWD + %physdmg + %dex/strbonus)
5: Deadly Strike (if it rolls successfully, x2 all damage up until this point)
6: %Conversion is applied.
7: +Flat elemental damage from weapon/gear/skills.
8: %WDM of skill used.
Since EWD is one of many modifiers that are added up to the same Bonus, ED is in most cases much more important to increase the overall damage out put of wdm skills.