The effects of guard mode is most apparent if you have a modded version of the game with a lower killrate. Units in guard mode attempt to hold position, and only attack when directly confronted by the enemy. They have less chance of successfully killing the enemy, but an increased defensive ability. This makes the unit more useful at holding a breach in a wall, or just keeping the enemy at bay whilst other units flank the held enemy. Unfortunately with the fast kill rates of the default RTW game, units on guard mode typically drop dead faster than they can hold the enemy off, so it often isn't worth bothering with. Slow things down, and a spear unit can often guard a street for quite some time. Phalanx units are also less effective at killing when in guard mode. They prefer to keep formation and are less prone to closing ranks with the enemy when in the default guard mode. Much of the time, it's best they stay in guard mode though as they can pin the enemy down whilst the cavalry flanks and strikes their foes from behind.