The Lance formation is a special unit formation that is unique to Bretonnia.
Forming the Lance
Knights in Lance formation form up into ranks only three models wide. Where most cavalry need five models for the rank to count towards rank bonus, Steadfast and so on, Knights in Lance formation need only three models. Essentially, wherever the rules say 'a rank of five or more models' treat it as reading 'a rank of three models.' For movement it is treated like any other unit, and has flanks and rears just like other units.
Any unit of Knights may start the game in the Lance formation. During the game, any unit of Knights may form the Lance formation by reforming. In effect, if by any means a unit of Bretonnian Knights is formed into a unit three models wide, it is treated as being in Lance formation.
Characters must be placed in the front rank, if at all possible, displacing Champions, Standard Bearers or Musicians into the second rank (or third if necessary).
Standard Bearers and Musicians operate as normal even if not in the front rank.
A Damsel or Prophetess may be placed in the centre of the second rank of the Lance formation rather than the front rank. Note that she remains fully in play even if she is not in the front rank (so the unit may use her Leadership, she may cast magic, etc.). If a second Damsel or Prophetess joins the unit, she may be placed in the centre of the third rank, and so on. If the rank in front of the Damsel or Prophetess ever falls below three models, she will move forward to take up the empty space. However, a Damsel or Prophetess that is not in the front frank obviously has no line of sight.
The Lance In Combat
On the turn that a unit of Knights in Lance formation charge, all models in the front rank fight as normal. In addition to this, every knight model in the flanks of the unit is allowed to fight, as long as they are directly behind a model in the front rank which is engaged in close combat to its front.
The enemy may also only attack back against models that are in base-to-base contact. Note that any Knight that is in a position to fight, but is not actually in base contact with an enemy, cannot target specific models to attack. Supporting attacks for models in the centre of the formation are made normally.
When removing casualties from the Lance formation, models are always removed from the centre of the back rank (unless the centre model is a character) before removing those on the flanks. After casualties have been removed, the models in an incomplete back rank are not automatically moved to the centre of that back rank, but can stay on the edges (so that they can still fight if the Lance charges).
A Champion (or character) that is in the second (or third) rank may attack as normal on the charge as long as he is in a position to do so, although he cannot issue or accept challenges unless he is actually in the fighting rank.