Much of my info comes from here: http://wiki.battlemaster.org/wiki/Line_settings#Formation
It seems to be pretty consistent with actual results still, but I would argue that we do need more information. (Get it? IN-FORMATION? ARHARHAR! Sorry I'm a little out of it.) The descriptions of pros and cons aren't really precise. There's also mention of how prone to casualties a formation is and how easy it is to break up that could expand our list of variables. What exists is enough to go off of, but it isn't really good enough to be much more than a guess, particularly if it works on percentages as you theorized.
Yes High Medium Low doesn't really highlight the the true differentiation. Looking at that you would assume that skirmish and wedge have similar penalties to defence. Also breaking into a rank as far as I know isn't a real THING as in, it is not an event that occurs within the system. In general a wedge was used because it maximises the amount of troops that can strike at something when using weapons that aren't long pikes or pole-arms. For that to work though the wedge must penetrate the formation. It is flavour text I don't believe we actually check to see if the formation achieves that or not, it is just the rationale for the offence bonus.
