I'm a fairly lowish level, but I don't see how this could possibly matter for a mechanic like this. Anyway, when selecting "manual defend", the party is thrown up to a fight against two Treants (or however they're named here) and four Shades (which all summon shadows). This party is way too low level to possibly stand a chance, straight up characters getting OHKO'ed. The fight's difficulty is cursory, however. Because when you select "manual defend" you are instantly transported to the battle, AND THE GAME AUTOSAVES. So, unless you have a closer manual save, you're stuck in this fight.