Generally I use them as frontline fodder. I throw them into the enemy whilst my proper troops maneouvre around to pin the enemy in. They're also great for soaking up enemy archer fire. Place them ahead of your army in loose formation and let the enemy waste their arrows. Militia Hoplites and levy pikemen are much more useful than town militia and watch though. They're ideal for being the frontline fodder and holding the line as the enemy infantry finds it harder to break through their long pointy spears. The thing with militia is you're not really worried about their casualties, so you can send them on suicidal missions and not really care. And any units that survive a tough ordeal, well you kind of feel pride in them at the end of the battle. Sometimes I even 'retire' them (eg, disband them back into the populace) but mostly I just send them to get slaughtered again. Finally, militia have their uses in settlement defence. They're usually the first units to be placed in any breach in the wall, and placed on guard mode, they often hold the enemy off long enough for your decent units to get into position.
I actually play a minor modded version of RTW, whereby all units get a moderate boost to their morale, and the kill-rate is toned down. This really makes militia units much more valuable as although they're just as bad at killing, they can hold out for longer. In vanilla RTW, they're just as likely to rout immediately as they are die in seconds. Regardless, the thing with militia is, they're garrison units first, soldiers second. Their use is limited, but still important.
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