From: Houston, TX
1. More often than not I find that combat planner telling me my attacks will not be successful, yet when commenced things go alright. The enemy retreats and my units are reasonably fine.
Think of the planner's advice as that of a really dumb staffer. I can't say I've ever really investigated it, because everyone quickly learns that it's advice is not very good. But even if it were brilliant, it would naturally be missing lots of info that Fog-of-War hides from you (enemy loss tolerance, support, etc.). By all means listen to its advice - but then form your own opinion.
Could someone explain how combat is conducted?
Sorry, no. That's too broad a question. You'll have to be more specific about what you are missing. And read the manual a bit.
For example, the planner will tell me my force with say 50+8 attack won't be able to take
say a unit with 12 defense.
What sort of defensive benefits is the defender receiving (terrain, deployment)? What support is it receiving? How much is armored vs. your attackers?
2. Continuing off 1. How are the attack and defense values determined. I check the equipment of my troops and see that most squads have a attack of 4 while heavier stuff have values of 20 or so. However most of the time these are simply AT guns. Do these AT guns even participate in battle on the offense?
They do, but how many shots they get may be small relative to tanks or other active equipment.
3. When I hover my mouse over a tile sometimes it will say AP 200% AT 300% FORT 60%. So does mean that if a unit has 1 defense against AT it will have 4.8 defense due to the terrain? In the kasserine scenario a single engineer unit was surround in a city during the first turn. It had a very low defense value, however even with encirclement and attack with the mechanized forces of the DAK, the battle planner still told me, there was a poor chance of success and that there would be heavy losses.
That's the Tool Tips option. You can turn that off if you wish. It's telling you the terrain adjustments to AP & AT strengths. FORT is the entrenchment level in the hex - that affects the speed that units can dig-in. Again, chances in combat are affected by relative strengths - modified by terrain, deployment, & support.
4. When a unit is dug in, is there anyway to reduce fortification apart from seizing the hex?
A unit can be knocked into mobile deployment if you damage it enough. Also, large shell weight artillery/aircraft "disentrench" dug-in defenders - affecting losses to those defenders during combat.
5. If I check the supply filter option, I see that must of my troops are on hexes with supply values in the 10-35 zone. Does this mean 10-35 points of supply reach them? If so how do I determine how much supply a Unit needs. Also, for example a a unit needs 9 points of supply to keep even with it's upkeep if it gains more than 9 points, that is put into the percent of supply listed below the window near the right top part of the screen.
The trace location value is the starting point for how much supply a unit in that hex receives. It is modified by a number of factors (Did the unit move/fight? Was it next to a cooperative HQ/Supply Unit? What is its Formation's Supply Efficiency? Is it a night turn? Is High Supply in effect? etc.). Units usually need as much supply as they can get - the more the better.