For large debris, the ISS and many satellites have collision-avoidance systems on board to adjust the orbit so that it doesn’t hit the debris. They fire a small thruster to increase the projected distance between the craft and the debris at closest approach. This is what Starlink satellites do, for example.
For smaller undetectable debris, they just have to build the outer shell strong enough so that it won’t do any significant damage. The modules of the ISS are covered in specially-designed layers of material that break up the impactor into many small pieces to dissipate the kinetic energy. It’s like being hit by a brick vs being hit by many particles of sand of the same mass.
Keep in mind that despite the large quantity of pieces of debris in orbit, the space around Earth is still very large and relatively empty. So while a piece of high-speed debris can be damaging, it’s less like dodging bullets in a crowded convenience store and more like avoiding an occasional stray bullet in Central Park (while also wearing a bulletproof vest).
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