When you initiate combat you have two choices either fight defensively holding your formation intact or try to breach enemy and rout it faster.
Breaching is calculated risk, if enemy is prepared you might just expose formation for counter attack and be breached in turn. It cost stamina and calculates skills + mass of defenders and attackers.
It shows friendly breaches as yellow and enemies as red.
When fighting at high levels breaching is usually a best way to win with lowest casualties, if you cannot overwhelm with multiple formations.
Still balancing each :)