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- Offensive pips (fire/shock/morale) cause "faster" battles, you inflict more casualties (and also possibly take more casualties depending on the enemy)
- Defensive pips (fire/shock/morale) cause "slower" battles, you take less casualties (and also possibly inflict less casualties depending on the enemy)
Fire/Shock (Offensive and Defensive) kill more enemies/kill less of your troops.
Morale (Offensive and Defensive) cause the enemy to retreat earlier/you to retreat later, thereby possibly inflicting/taking additional casualties.
Which is best for you depends on your situation and your playstyle.
Castile is a strong starting nation. You have the power to overwhelm most early enemies (except France and maybe Aragon). Thus Offensive units are probably better.
When starting as a small(er) nation where every soldier counts so you usually (there are exceptions) want to keep as many as possible alive and take Defensive units.
Wars against big(ger) nations are usually won by sieging, not by fighting. So a decisive first battle isn't that important. Keeping your troops alive (which saves money from reinforcement) can be so much better in many situations.
Note that you can change your unit type at any time for no costs (except low morale). So it is completely possible to e.g. use Offensive units in North Africa, change to a more Defensive unit, wait some months to get back morale and then attack France.
Yeah. Basically.
Note that during the early game, even against a smaller nation, stackeipes are uncommon due to the dependance on morale. Thus Defensive Units are better, since sieging is much more important in the early game.
In the late game, stackwipes are very common due to massive casualties and desertion, especially if you invest in mil ideas. Thus offensive is better to crush your enemies.
In the late game, destroying enemy armies is a much more crippling concept. In the early game, armies don't cost as much to re-create.