Most human-sized troops can only sustain 1 wound before they fall casualty. Some models can take several wounds before they become casualties, but these are the exceptions rather than the rule. The number of wounds a model can sustain before it falls casualty is indicated by its wounds value or 'W' on its profile.
Where troops have only a single wound casualties are removed as follows. If a unit of troops is hit and suffers wounds which it does not save then for each wound suffered one model is removed as a casualty. Casualties are not necessarily dead, they may be temporarily knocked-out, or simply too badly wounded to carry on fighting. For our purposes the result is the same so we can consider casualties as slain.
The player who has suffered the casualties must remove slain models from the unit. Although casualties would really fall amongst the front rank it is convenient to remove casualties from the rear of the unit. This keeps the formation neat and represents rear rankers stepping forwards to cover gaps in the line as they appear.
If models have more than one wound then casualties are removed as follows. Imagine that a unit of Minotaurs suffers 5 wounds from arrow fire. Minotaurs are big monsters and each model has 3 wounds. The arrows would fall randomly among the unit, possibly wounding several creatures, but for our purposes we shall remove whole models where possible. So, 5 wounds equals 1 model dead (3 wounds) with 2 wounds left over. The wounds left over are not enough to remove another model, so the player must make a note that 2 wounds have been suffered. If the unit takes another wound from some other attack, then another Minotaur model is removed. It is important to keep a record of wounds taken by units such as this.
In the case of cavalry models all shots are worked out against the rider. If the rider is slain the mount is removed as well. This is a convenient and practical way of representing cavalry, as it dispenses with the need for individual dismounted riders and loose mounts. Obviously some riders are slain, horses bolt and run away, and some mounts are killed throwing their riders to the ground. However, these things can be safely imagined while models are removed as a single piece. Note that this only applies to ordinary cavalry (mounts which have 1 wound on their profile) and not to large monsters which have riders. Large monsters have more than 1 wound on their profile and are covered by the rules for Monsters.