I'm only on Level 3 of the first campaign and I've been periodically using the K key after a battle to kill off any surviving but crippled units to free up the slots for healthier and more mobile troops.

This seems a bit wasteful (and cruel!), so I was wondering is it possible to heal units? I can't see anything obvious in the manual and don't remember anything about it in the tutorial.

Ah great, thanks!

Yeah there are units than can heal other units (I think all 3 light races have healers, atleast humans and elves). Also your avatar can have some if you skilled white magic. Besides that your heroes can have some too. I always keep atleast one designated healer in my group. That is really usefull, since there are maps where you only play with your avatar and your heroes. So anything that heals is greatly apreciated. :)

There are a few ways to heal units.
1. Food Store (as long as you have enough food)
2. own units (like Clerics, Druids, Battlepriests or the Dwarf Titan)
3. Avatar and Heroes through specific skills and spells

But i'm not sure if Food Stores works similar to a forge, which reducing the production time of units for every forge you have. Haven't played this game for too long. :3

food stores allow your units to regen health and mana, so keep a couple food stores up at all times and manned, and later when you have tons of resources, use your extra workers to build and station extra food stores. I often near the end of maps have a dozen or 2 food stores up and going so troops can get their health and mana back up, especially if I'm using casting units I need that mana regen so they are useful after the first few seconds (Orc totems, etc).

Interesting idea. I only ever build one food store to double my food output and viewed the healing as a secondary function. Never thought about simply building a lot of food stores to heal my army.