A few words of warning here. First, if you intend to play the game you simply must get the 1.02 patch. Otherwise you'll be waiting an eternity each time you go to or from the tactical combat. Even with the patch the transition isn't exactly speedy. This is important because in the default speed things happen far too quickly to effectively control your troops.
Tactical battles take place on a variety of maps representing the terrain that the armies met on.
These have both navigable and unnavigable terrain. Unnavigable terrain can be used to your advantage if you have missile troops, they can shoot over it. It may also create choke points that can reduce your frontage against a numerically larger foe. You can direct your units to move, defend a location or attack. You can also have your mages cast spells, providing they have any mana left for that turn.