Better handling of units is on development goal candidates for the current stage we are at (past the villian arc stop-off) along with things like mounts so likely if Toady does turn their attention to it, we'll get a bare-bones system which will be a improvement on either and a follow up bugfix hopefully.

At the current given moment you can only really pre-position dwarves according to speed that they can travel at (and safe distance to fire) by stationing with some fortress architecture to dictate how its going to work.

Unit control is pretty poor right now, but there are some ways to improve their behavior using specifically designed passegeways with drawbridges/floodgates/doors to cut off certain parts of them. Here are some of the possible methods:

The simplest, perhaps, is "a frontline", as described by Sethatos, and is best suited for a small (10-20 troops), well-trained, well-equipped military. You make a long passegeway, 5-6 tile wide and position your militias at the very end of it, so that they'd have to fight through the entire invasion before they can get out in the open (which you don't want them to do). You can further improve this tactic by positioning your dwarves in a 5x2 formation using the 'protect burrow' order, behind a floodgate "wall" with a single open door to lure the invaders towards this position: once the enemy is close, pull the lever to open the floodgates and unleash your military.

A bit more intricate, but improvable design is another 5-6 tile corridor, but this time it turns (90 degrees, in any direction where you got space for it) each ~15 tiles, forming sections. At the end of each section you can place a cutting off drawbridge: as the invasion stretches throughout the tunnel, you pull the levers (you need a separate one for each bridge) and divide their forces, so then your militias can deal with each section one by one, getting as much time to rest and recuperate as they need in between. You can improve it for the use of a larger military by adding "formation rooms" (similar to the one you have at the end of the tunnel, for your troops' positioning, but hidden behind a drawbridge instead, as you don't want some troll to mess everything up) at the end of each section in such a way that once the section is cut-off by a bridge and you unleash your main squad(s), you can unleash an additional one (or two) to attack the rear of enemy forces in the same section. If you have ranged troops, you can also expand this corridor upwards and carve fortifications some 1-2 z-levels higher in the end wall of each section: from there, your marksdwarves can ceaslessly fire at the enemy, as long as they got ammo; one important thing to do, though, is to have floodgates/doors/a drawbridge on the same level as fortifications, but outside of them, which can be locked by a lever to stop your markdwarves from firing or being fired at, in case the things go haywire; another important note on markdwarves in general is to make sure they have no melee access to the enemy whatsoever, lest they decide to go in melee once out of ammo. This tactic works well for any kind of military, depending on the improvements you make.

Another alternative is an "ambush tunnel". A 1 tile wide, snake-like corridor that is separated by turns and drawbridges into 10-12 tile long main sections. The main sections are parallel to each other and are connected by 3 or 5 tile long secondary sections. The most important part? The walls of the main sections are two 10x1 drawbridges, with your military squads positioned behind each one in a 10x1 burrow. As the invasion stretchses throughout the tunnel, you lock the section-dividing bridges and then open the wall-bridges. The result is thin lines of 10-12 invaders (sometimes a bit more, due to them crawling occasionally) being attacked from each side by a 10-dwarf squad in full force. Obviously, this tactic works best for a large, melee-oriented military that isn't necessarily well-trainded or well-equipped.

I agree with most of what you wrote, but would like to say that this tactic above works well for any number of squads.  I use it frequently.  As Sethatos mentioned, given well-equipped and trained squads, I find exhaustion or separation becomes your primary killers, and maximizing the number of bodies on the front line alleviates those.  The more bodies you have, the less they will get exhausted (fewer drawn-out 1x1 combats), and the less dangerous it is once they do become exhausted.  Since the dwarves seem to happily fight even when packed multiple to a tile (and with no apparent combat detriment that I can notice), I regularly throw 40-50 dwarves into spaces like these and watch them gobble up large invasion groups like Pacman. It becomes even more important if you add in enhanced invaders from mods.

I didn't mean that this tactic is only good for small militias, I just wanted to say that, in my opinion, you can get much more out of a larger military by using more elaborate tactics instead. The frontline tactic will, indeed, still work, but a lot of soldiers will stand rubbing their necks, when, instead, they could've been mowing down enemies from the opposite side at the very same time.

As far as my observations of combat AI go, until the enemy lies on the ground, units (both the defenders and the invaders) avoid stepping on a tile where another standing creature is present (this can also be observed on testing arena by placing two tight packs of troops, of which only the front lines will charge and the rest will weirdly stroll towards the enemy). Indeed, as soon as the first invader looses their leg, the piling up starts. The prone soldiers are then reduced to a crawl until they stand up again (only as soon as there is nobody else on the same tile anymore) and don't advance as fast as their standing comrades, thus, loosing in effectiveness somewhat. Also, prone soldiers are easier to hit, and received hits get double the velocity, but that only matters if the enemy is anything serious, of course.

Well, yeah, it's a complex issue. Regarding dodging, I know adventurers are prohibited to dodge into a tile with a standing creature. I don't know whether or not the AI troops have the same restriction, but, even if they do, they can bypass it by dodging into the same tile in about the same time - which probably happens often in a tight space with lots of dodging units.

I'm not too familiar with Fortress Defense, but unless War Elephants have some serious natural combat skill levels, they would still be pretty weak compared to a legendary level militia. It is entirely possible that your dwarves dodge everything even when prone, if the elephant's attacking skill is Proficient or lower, for example. Actually, I'm not sure whether the dodge skill suffers in any way from being prone - by being "easier to hit" I meant that the attacker gets a bonus to the accuracy roll (when failed, it produces a message like "The Noob Gobbo misses the Superdwarf!", even if there is no dodging involved), but I don't know how much this roll and dodging roll are connected.

Size matters a lot, but, as you said yourself, only if they land a hit. And the skill difference (attack vs dodge/shield/parry) seems to be the major breaking point for most invaders when it comes to it. Until somebody passes out and becomes unable to protect themselves, that is.

Prone units get a brown background for their tile, it's fairly noticeable in ASCII-like tilesets. Also, tiles flash between different units standing on the same tile - and only one of them can actually stand, the rest are forced to be prone.

From playing a fair amount of adventure mode, my impression is that when you have a fight, the first hit is crucial.  You get so many debuffs from being injured that unless you are absolutely head and shoulders above your adversary, it will be quite difficult to land a hit again.  So being able to hit is probably more important than size in a lot of ways.  However, the nice thing about size is that it basically negates armour  -- if you hit, you're going to do twisting, etc damage.  Could be really useful if you do not have superior weapons to cut through the armour.