The following link is to Tootee's Shogun Academy. Click on Dojo and then Chapter Three to learn about combat. Of course, it is Shogun Total War being discussed, but the principles are similar (if not identical) in MTW. Then when you are done go back to the main page and read the correction to the combat formula.
http://shogun-academy.tripod.com/main.html

That should help.

And remember, spears facing a Cav charge in Hold formation generally cancel the Cav's charge bonus (there may be limited exceptions in MTW that we don't know about yet, but I doubt it).

Basically, each side is considered an attacker/defender simultaneously and the game takes it down to a one-on-one level. Attacks are made against the opponents defense, and the opponent attacks against your defense. So if the same unit-type (valor, armour, weap) are fighting eachother, each swing of the weapon has the same chance of hitting (for either side).