This means that only Clear and Desert hexsides can be crossed. Decrease the production value of captured enemy cities by 1. I believe the rules state that no new units may be built in captured cities at all. We've even drawn a big hex on a sheet of paper to visualize these. The hexside limits are followed, but there is no hex limit to the number of land and sea attackers.
Air stacking limits are the same as per the regular rules.
Any attacker that retreats must do so across the hexside it attacked from. If victorious, the attacker must move in one or more ground units. This variant is ignored in all-sea hex battles. What this does is force the defender to protect his wings, as up to 12 ground units might be able to attack a surrounded hex. It also spreads the attacker out, as flanking maneuvers become important.