Sorry for the delayed reply, a quick run through of how it should work:
Melee is determined on a figure-by-figure basis. So at its most fundamental: a player leads one 10-man infantry unit into another 10-man unit standing out in the open, each figure would line up against his opponent and each player then rolls 1D6 for his man in each of the 10 combats taking place.
If the winner in a given combat has a modified dice roll of at least two higher than his opponent, the opposing figure is removed. If the difference is less than two, the melee continues until the next unit card in the melee (either the attacker or defender's) is drawn.
After the first round of melee (i.e., the one in which the attacker moves to contact), you can move any excess figures to 'gang up on' ongoing melees, thus contributing the +2 bonus for an additional fighter in a given combat. This leads to a situation where if you take our two unit example above it could look like this:
Round 1: Bolshevik player draws the card for his unit of 10 Bolshevik infantry to move to contact 10 Chinese infantry in line in the open. The Bolshevik player has sufficient movement dice to get his entire unit to close contact. 10 combats are rolled for, the Bolshevik player wins 6, draws 2, and loses 2. At the end of this round you have 8 Bolshevik troops fighting 4 Chinese troops.
Round 2: The Chinese unit's card is drawn, and the surviving figures are redistributed, the Chinese having lost 6 men initially are down to 4 against 8 surviving Bolsheviks, so the excess Reds move to support the remaining combats and thus provide the +2 bonus for outnumbering the opposition. Four combats are rolled for, and all 4 Chinese troops are destroyed, so the Reds now have 8 surviving infantry after two rounds of combat.
The main exception would be where a melee attack is going in through a defended defile or passageway (a trench, doorway, gate etc.) whereby you can only get a limited number of troops to contact one another for space's sake. If you had four defending figures fighting 6 attackers but the space only allowed for one to fight one at a time, you wouldn't be able to begin assigning the excess attacking figures until they had broken through by destroying the initial defending figure (think Thermopylae, or Helms Deep on the causeway).
Does that clarify things?