Here are the stages of combat: 1. Your squad encounters enemy squad 2. Declare your attack (or retreat if your a wuss) 3. The squad charges their attacks based on their ATT/turn rate 4. The squads battle it out until a victory or retreat
Damage System: The damgage equation is Your Unit's Attack - Their units Armor = Their units lost HP. THE WEAKEST UNIT IS AUTO-SELECTED TO BE TARGETED, UNLESS THE TEAMS LEADER SAYS OTHER WISE. IF THEIR ARE MORE OF YOUR UNITS THAN THEIR WEAKEST UNITS, THE REMAINDER OF YOUR UNITS AUTO-SELECT THE NEXT WEAKEST UNIT.
Pro-tip: Always, always, always choose to plan your attack! A good strategy is a billion times better than a generic system. It takes more time, but if your playing the game right, that won't matter much.