Skirmish is a command for your missile troops, when activated, they will flee when approached by enemy forces, and stop to fire arrows/throw pila only when the enemy is out of range. Handy when you want to harass the enemy.
When Skirmish mode is turned off, your missile troops will stand their ground, which I find quite handy in defensive battles, though just keep an eye on them, because many missile troops can't hold their own against infantry.
Hope this helps :)
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