I think what he means is the (much older than AoE DS) method of using a single unit on the battle-map but having several on a second attack screen when they engage.
Personally my vote is almost always for clarity, although units can be nice.
The thing about units is that they don't work well on this screen size. here's a quick try for swordsmen against your knights:

what it comes down to in my mind is this : what purpose does seeing men serve you?
if the shape of a unit is important, then you'll need 6 units in each squad to make proper formations:
xxxxx - firing line - ranged weapon bonus
x x x
x x x - battle ranks - melee weapon bonus
x x
x x - march column - movement bonus
x x
x x
x x - square - no flanks (foot only)
x x
x
x x - wedge - charge bonus (horse only)
x x x
etc etc. You won't be able to do these well with any less men (5 can service but not as well).
This will be quite hard at your res (which almost def. cannot do 6 abreast unless your men are just colored squares).
if the number simply represents "hitpoints," than anything from 2-6 works fine for you. i actually recommend using, as i have here, 6 for a large infantry unit and as you had 3 for a smaller horse unit (even if more reasonable proportions would probably be 5:2).
If there is no interface/gameplay purpose than you're by far best served by a single man for each unit.