The game is based on Fantasy General, which was part of a series that started with Panzer General. The mechanics of Fantasy General aren't fully explained in the manual either, but at least for Panzer General, they've been worked out, and you (or other readers if you've already moved on) can have some inkling of what they mean.

The most important stat you didn't ask about is not the Attack or Defense, but the current strength ('HP' in Fantasy Wars) of the unit. The way combat works is this: For each strength point, the unit gets one 'attack', which is a chance to score a hit. Each attack is resolved by subtracting the relevant Defense from the Attack stat; and that is used as a modifier to the 'to-hit' chance.

The expected outcome is then based on average results. So in the case of your bowmen, assuming 10 strength, they have a '-2' to hit, and that's resulting in, say, a 20% chance to hit. Hence the expected enemy losses. Of course those are rounded, so the modified to-hit chance may not quite be that. If it's like PG, then if you had even attack odds, the to-hit might be more like 30%. But there may be other adjustments, and it's probably not linear either, meaning if you had a full-strength unit with a +8 modifier it might do less expected damage than two half-strength units at +4 (on the other hand +8 is likely going to do a ton of damage regardless).

Your own losses (in melee or skirmish) use the enemy's attack vs your own unit's defense.

The net effect is that it's better to have more units (effectively more strength points) with reasonably good attack than to have a small number that are overpowered on attack. Conversely, you want as high of a defense as possible, to preserve that strength (thus Defense perks are typically preferable to Attack). As long as you're a little better than the enemy units, you should be good.

I don't know for sure what the prediction colors mean, other than it seems to show either a special bonus is being applied, or maybe how much relative damage it is doing to that unit.