I believe it's a "chance to hit" when X unit is at Y distance, which means it is all or nothing damage, though units tend to engage at optimal distances when they are set as such. This means that a highly shielded ship, such as a bomber or tank has greater chance to negate enemy fire from a distance. If an enemy unit closes in, such as a fighter, more shots will bypass the shield and deal full damage.
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Not sure if ships overkill by themselves, but if you manually target a unit, it will attack with all of its shots, but I would assume the unit would attack with a complete volley because it would have to still reload.