I see age wisdom had a post on this in 2012. since then the wiki has more info.
Defenses are determined by character attributes and class and are further modified by level, equipment, spells, abilities and talents.
fighters:
Increases melee defenses but decreases melee attack rate and allows the fighter to engage two additional targets in melee engagement and increases the range at which they engage targets. [edit] NotesThis is a particularly useful mode to enter when a fighter is blocking a route of attack to protect other party members.
All characters who are not moving and have melee weapons equipped project a small Melee Engagement radius around them. If an opponent enters that radius, they are instantly Engaged and stop moving, attempting to move any significant distance away from the attacker will provoke a Disengagement Attack
the activation of limited-use tactical abilities, such as spells. Positioning your party and coordinating attacks and abilities is one of the keys to success.
and yet there is no clue if the party has a formation