As others have said, guard is important for holding down positions instead of pursuing. Doubly importnt for phalanx units since they get in trouble quickly if they get flanked while pursuing.

Quote Originally Posted by Simon Appleton
I have a vague memory that guard mode ups your defence at the expense of your attack (as well as getting the unit to hold formation). So it would be useful when receiving an attack, perhaps especially for spearmen against cavalry. More generally, you could use it to protect an "anvil" units on the front line knowing that the real killing will be done by your "hammer" units about to strike on the rear or flank.
........
Is it true about the defense increase? First I've heard of it and never came across this in guides.