I've made a couple of tests...
Playing with the option on basically makes what I expected:
Every time a unit in a stack where archers (or units with bombardment) are present, the fight works normally, but the archers in the stack get to attack the other units in the enemy stack. Soo...
1. You have 2 archers and a warrior vs 3 warriors
2. Your warrior attacks one of their warriors
3. Your archers "bombard" the enemy causing colateral damage to other units in the stack (not the defending unit). Also, they sometimes miss, but I don't know how this is calculated. Also, if the defender had archers of their own, they would also bombard you.
4. The battle between the attacker unit and the defender unit resolves.
So basically I have 3 ideas of why this could have been removed:
1. AI does not know how to use this: This option makes archers and projectile units very strong and useful, since they get to bombard the opponent every time a battle takes place. I don't know how damage is calculated, but it varies. I basically think the game uses the "bombard" command added with the mod because if you disable it, this whole option stops working. Damage is not that great, but it wears the enemy down over time... if the AI doesn't adapt and use projectile units in their stacks they would probably be in a disadvantage.
2. Combat animations become buggy: When you activate this option, the game tries to show the archers shooting arrows and then the real fight between the attacker and defender. Sometimes the fighters simply don't fight and the battle is skipped, other times some fighters die with noone attacking them... that's only aesthetics though, I don't really think this was the reason why they removed the option.
3. It is too powerful: To be honest I'm not sure about this, but I guess we could consider it being too powerful thus breaking the game (?). I could see some reasoning behind this since it basically means you get as many bombards as melee units you have in the stack per archer. So, if I have 3 archers and 3 warriors and all my warriors attack, this means 9 bombards without my archers spending their action. Keep in mind that if my opponent had 3 archers too, it would mean I also got bombarded 9 times... so I guess it's more an AI thing than anything else.
It did not seem buggy, but it's quite confusing how is damage calculated I felt my units were doing more damage than I rememberedin ROM. Maybe bombarding damage was increased? Or maybe is this the real cause?