Very simple.Difrent activities your soldiers perform tires them and reduces their performence in time. Also,if you tire your soldiers too often they might desert you despite being paid regularly.
Actions like marching,fighting,looting,civil work,hunting down enemies,police work tires them.
So they would have less CS in battle because they are tired.When looting tired soldiers do less damage to a region and even risk getting killed or injured by the local peasents.Same when hunting enemies-higher chances of death and failure to capture them.
A tired unit takes a lot more hours to reach is destination when marching.
A tired unit doing police work gives infiltrators the advantage.
When your troops are idle-doing nothing-they will recover some of their tiredness each turn.Not as eficient as resting though.
