Combat is RTS-styled, you don’t hack and slash with a unit, as in you don’t have that level of control.
In regards to customization, and further combat info:
[urlhttp://www.reddit.com/r/IAmA/comments/1e92bf/iama_team_of_twin_brothers_who_quit_our_jobs_to/c9xzo3t] Can you go into further detail about the combat class options that will be available? [/url]
"*For combat, you’ll be able to customize your army through class and gear. Your unit’s class will determine most of its abilities, and we’ll have all the archetypes represented: tank, melee nuker, ranged nuker, healer, etc.
Then each unit’s gear will determine some passive bonuses, and occasionally grant new abilities. For instance, you may decide that you want a strong defensive front line, so you promote 10 footmen and just 2 archers as the main damage dealers behind them, but you can choose to arm those footmen with swords, which do extra damage, or maces, which have a chance to stun on hit.
Of course, all of this is just an example of the kind of feel we’re going for. Exact mechanics are subject to change."*
As for upgrading, I’m pretty sure there will be an upgrade system, at least something like wood -> Iron -> Steel