The general procedure for combat (or for other extended actions -- these rules only discuss combat but the system may be used for other actions also) is that each round, both participants roll their skill as a normal opposed action, adding in any bonus they have. The winner can choose either to damage their opponent, or to receive a bonus on their next roll. If they damage their opponent, the damage inflicted is equal to one plus their current bonus. If they instead take the bonus, they receive a bonus equal to half the degree of success, rounded up (but capped at +4). So, if one character rolls with a +2 bonus from the previous round, and wins by 7 degrees, they can choose to either receive a +4 bonus next round (7/2 rounded up), or to do 3 damage to their opponent (1, plus their +2 bonus).
The obvious result of this system is that a character who rolls well once will tend to continue to roll well in the future since they're receiving a bonus on their rolls. If your opponent is the one with the bonus, it may be time to try something non-standard rather than rolling to attack -- throw dust in their eyes, trip them, jump onto a table, or swing on the chandelier. These kind of action moves generally give the character a bonus of +1 to +3, depending on the investment (ie, spending a move to set it up gives a larger bonus, as does something where you have to make an additional roll to make it work). In addition to these bonuses, characters can choose to be either especially aggressive or especially defensive on a particular round (announced before the roll). Aggressive characters suffer a -1 penalty to the roll, but if they win, the damage done or bonus received from the roll is increased by 1. Defensive characters gain a +1 bonus to the roll, but if they win, the damage done or bonus received from the roll is reduced by 1.
Characters have three checkboxes to track their injuries. Each time the character is hurt they check some of the boxes (depending on the damage done). If more boxes need to be checked than are open, one of the checked boxes is double-checked, and the remaining checked boxes are cleared (any further boxes that need to be checked from this one effect are ignored). If no boxes are available to be double-checked, the character is unconscious/on the floor (although if they'd like to make a heroic move they can usually use a Favor to do so). Thus the normal wound progression will be: check check check double-check check check double-check check double-check unconscious.
Single-checked boxes represent scrapes or minor cuts: they are cleared at the end of the scene. Double-checked boxes are more serious injuries: the character suffers a -1 penalty to all actions per box double-checked, and they take some time to heal (the exact time depending on the length of the injury and so on). Characters can use Gift/Faults to change the number of checkboxes they have, or the exact effects of having them checked.
When fighting multiple opponents, the single fighter suffers a -1 penalty for each additional opponent beyond the first, and can only damage one opponent a round (so any other opposed actions which they win have no effect on the opponents except to hold them back). Any bonus the single fighter has only applies to the opponent they intend to damage.
No-name opponents (groups of guards or thugs or whatever) are treated like a single opponent for simplicity of rolling, although the rules above continue to apply (-1 penalty for extra opponents, can only damage one). However, against no-name opponents you may take an additional -1 per person and damage them also -- so fighting four guards people and wishing to damage two of them in a single round would be a -4 penalty (-3 for three additional people fighting you; -1 for damaging one additional person). No-name opponents will often have only one or two health boxes.
Fighting without a weapon incurs a -2 penalty against an armed opponent; this drops to -1 if the character has some kind of relevant unarmed combat skill.
Fighting in the dark also has a -2 penalty, -3 in pitch blackness.