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I've played across many editions of WHFB so as my friends are getting into the game and i'm re-learning the new rules. So with that said, i have one specific question and one general question..

1. It used to be you couldn't target a character within 5" of a unit unless it was actually closer to you than the unit. Now it seems as long as you have LoS, you can target a character. Is that correct? That's quite a life threatening nerf to characters ;-)
2. If you've played past editions, what are some of the big changes i may need to be aware of?

Thanks in advance.

Painting my Ogre Kingdoms as we speak...

1. Yep, no more hiding near units.
2. I haven't played any previous editions, but I know you used to need a rank of only 4-wide to get a combat bonus and now you need a rank of 5.

1) you are correct, however you have to be US5 to be picked out when within units - so US2 mounted characters cannot be picked out with normal shooting.

2) All units march now, no "running" for skirmishers - so skirmishers are march blocked same as everyone

Power dice only useable by the wizard generating them, no more sharing power dice apart from the "2 for the army"

Immune to psych is now only immune to fear, terror, panic - they kept the same name to remain cmopatible with 6th ed books

Panic tests from fleeing friends, terror tests, etc. are all 6" range now, instead of some being 6 and some being 4 as in the past.

Some Battle Standard Bearers can now take shields, it depends on the army book's wording.

Skirmishers and single characters can be march-blocked just like formed units.

Redirecting charges has been replaced by Enemy in the Way (which was supposed to simplify things, but didn't).

Units in close combat are Immune to Psychology, and so they won't take panic tests if a broken friendly unit flees through them, or if they are charged in the flank, etc.

Fleeing units go in a straight line. If that takes them through an enemy unit of US5+, the fleeing unit is destroyed. No more veering around the battlefield trying to avoid enemy units.

If a unit breaks its opponent in the first round of combat, and pursuit takes it into another combat that has not yet been resolved, the victorious unit can take part in that fight, and counts as charging. A unit can only fight twice in a single close combat phase, though.

And as Nosf. said, Immune to Psychology troops can now be affected by frenzy & stupidity.

Troops armed with hand weapon and shield get a +1 armor save 'parry bonus', but only to attacks from the front.

Vampire Counts have three 'necromancy' spells which a single caster may attempt multiple times in the same magic phase. All units in the VC army are now classified as undead.

All High Elves have the 'always strikes first' rule.

Dark Elves 'hate' all enemies.