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Troops located over a tile providing cover will benefit from its bonus, which is visually indicated by a cover icon appearing next to the troop's banner.
In the case of "tile edge" walls such as palisades, the cover bonus affects both sides of the wall: enemy units that reached it and are in the process of breaching it will therefore also benefit from the cover bonus against the defender's ranged attacks.
The effect of Cover is that it adds a matching amount of armor points only against ranged attacks to the covered troop.
Palisades and battlements provide a huge cover bonus, making troops almost immune to low-damage ranged attacks.
(Should this be categorized under units? It has to do with unit stats)