Whenever a unit is struck in battle, it may suffer an affliction. The chance of this occurring is simply the % hit points lost in the blow. So if a normal 10HP soldier receives two 4HP blows, he would have a 40% chance and then another 40% chance of getting an affliction. What type of affliction is suffered depends on which part of the body was struck.
There are major afflictions and minor afflictions. The chance of an affliction being major is affliction chance / 1.5, or at most 33%. Where the hit occurs determines which kind of afflictions may be inflicted. The game will randomize from all afflictions available for that level (major or minor) and that body part.
Profuse Bleeding is the only affliction that is not permanent: it will disappear during or after the battle. While a unit bleeds, it loses 5% of its hit points and gains 10 fatigue per round of combat. The bleeding has a 10% chance of stopping per round. Being underwater halves this chance and regeneration increases it.
Limp will cause commanders to suffer a -4 map movement penalty. Non-commander units do not lose any map movement points, but whenever their army marches more than one province in a month, they will have a 25% chance of dying.
Cripple will cause commanders to lose 75% of their map movement speed. Non-commander units do not lose any map movement points, but whenever their army marches, they will have a 50% chance of dying, or a 75% chance of dying if marching more than one province.