When a unit charges you, they attack first. Their attack is resolved and you remove any casualties. If your unit was not completely destroyed, then you may choose to strike back, you do not have too. If you do choose to fight back, then you attack with your surviving models and your opponent removes any casualties. After that your opponent moves their unit back 1 inch if they are not completely destroyed.
The first time you fight in melee per round it's at your full QUE. If you fight again in the same round it's at QUE +6. This is were choosing to strike back is important. Let's say your opponent has a lone goblin near your unit. He also has a full unit of orcs next to your unit. He charges with the lone goblin first and doesn't kill anyone. If you strike back and kill the goblin then when your opponent charges with the orcs in that same round you will only be fighting at QUE +6 as you've already fought in melee this round. What I would recommend in this example is let the goblin charge but do not strike back in combat. That way when the orcs charge you fight back at your full QUE.
If a unit is completely destroyed the victorious unit (attacker or defender) can move their unit 3 inches in any direction (or pivot 180° if playing AoF: Regiments).
I hope this helps to clear up some things!
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