In Militarizm-II the units were redesigned. Now all of them have limit of attacks, some of them may counter-attack after being attacked (this is independent from if they have defense; planes are never counter-attacked but for fighter clash it was edited back). Only close attacks are counted (infantry attack their own and adjacent tiles, planes - only their own tile). Ranged units (artillery has range 3 attack, howitzers have server-adjustable range like 5) have number of shots equal to their speed; they support friendly units in combats.
Other changes were removal of naval units and mines (in Mili-I they were put on seas for 50% moves of the mining ship, and even your own ships could explode on it just with 5 times less probability than foreign ones) and appearing of transporting units (the latter were done in a very controversial way).
Unit morale in this version is checked at the end of iteration (1/3-turn movement phase), so a unit will attack with any losses before it ends. That means, in the first iteration all units may attack if it's severely needed. (Btw, "retaliate" command moves the unit only from its targets, so to make a damaged unit return to its base without panical jumps from passing through enemies player should clear all its target specs).
In both editions, units don't regenerate from just idling. They should be repaired by special city activity (applied to max. 3 units in the city) or by "Stab"/"Remounting batallion" unit. The latter unit/base (it converts between the states) has one more ability - any movement from the base is considered a road step (thus, stabs are built at river banks for fast crossing).
Unit can attack only targets it sees, and artillery has vision radius 0. Artillery fires at "Bombardment by correction" mission at units detected by your another units if they are within your artilery's target list; alternatively, it may shoot at specified square disregarding if there is something in it.
From other commands, we should note that there are "Agressive attack" command (attack any targets) and "Cautious attack" (only ones with less defense).
Units may help production in a city not by disbandment (it just wastes all) but by increasing its "industrial level" with performing special activity.
The game in genral was designed a bit more "hardcore simulation" than Freeciv; there were guidelines about tile sizes (4x4 km) and turn lengths (1 day) and correspondence between game units and real military divisions of 20th cenntury. Of course a simple game could not avoid certain simplification and conventions to retain playability, and its alleged "realism" spawned endless holywars in its community that was one of the reasons why it is virtually forgotten for now.