All Valour increases fighting ability in melee for all.

For every two ranks of the general your troops get +1 to attack and +1 to defense. That is then calculated to 1 Valour.

While if your unit has fought and defeated a lot of enemies they might get another Valour themselves. That Valours is a bit different as it adds +2 Morale as well.
Valours you get from provincebonusses include this as well. They are the true Valours.

But both types can be seens as small pennants on the unit. And you can see your own units strength if you press F1 during the battle (almost everything included).

Archers do get better, but sadly it is very little. It is only noticeable when they reach about Valour 5-6. But by then they should be capable in melee as well.