Units have a tenacity value and when a unit takes enough hits that equal its tenacity value it becomes shaken, while shaken, all future hits against that unit cause Valour tests INSTEAD of adding another hit marker, which if failed would rout the unit off the table.
Separately and similarly, the brigade as a whole is constantly in a state of flux of how viable it is and this depends upon the health of its constituent units, so every time one of its unit reaches shaken status, the brigade (use the brigade commander stand to mark this) suffers 1 Setback marker.
If a shaken unit fails a Valour test and routs of the table, then the brigade commander will get a second Setback marker due to that unit’s deterioration.
Once a brigade commander accumulates 3 Setback markers due to deteriorating units, it is considered WAVERING and each new setback result for that brigade causes the brigade commander to take take a Fortitude test INSTEAD of adding another Fortitude marker. Failing this test removes the entire brigade from the table.
The nuances are that individual units can attempt to rally to bring the number of hits scores against them down and if they manage to reduce their hit number to BELOW their tenacity number, then they are no longer shaken AND their brigade commander will remove one of their Setback markers, which is how brigades recover from Wavering status.
Of coarse, while a unit is shaken or a brigade is wavering, there are die roll modifiers. Wavering brigades find it harder to activate and shaken units find it harder to inflict hits.
It strikes me that Rally is a highly important function within the game and a player needs to think in terms if keeping a reserve of fresh units plus using the rally to help out tired (shaken) units. Not helping out a wavering brigade will surely see it being removed from the table sooner rather than later.
Note - in the most recent Q&A document, the author feels (I agree) that smaller battles which use 3 or 4 brigades or less per side, can be too dramatically affected by the sudden loss of entire brigades and so they now offer a slightly different way to managing brigade setback / wavering for smaller games.