I'm not certain, but I think that your units regenerate if they stay out ofcombat long enough to turn from white back to blue. If so, that would mean that as long as your units are individually tougher than the enemies, it's to your advantage to dart in, take a bunch of non-lethal damage but destroy a lot of enemies, then back off to regenerate before repeating the process.
There's also some times when there are two separate enemy groups, usually red and orange (might be hard to tell depending on your monitor), who will fight each other if you evade them but if you stay in between you need to fight both simultaneously.