Weaker units wisely team up against a single, stronger opponent, overwhelming them. To counter that, you must keep them off your back.
This spell can be useful to ward off creatures that attack your stacks as "retaliation fodder", who attempt to absorb your stack's retaliation before a different, perhaps more valuable stack attacks.
It can also be used to avoid attacks by weaker stacks that carry an innate ability that you wish to avoid, such as the Poison attacks of venom spawn. Finally, if you find yourself wading into combat with one powerful stack facing many lesser ones, successive castings of this spell can keep your stack from being swarmed.
Cowardice is negated by the Mind Shield artifact, and does not affect undead, mechanical, and elemental creatures. The Crown of Enchantment can confer on the caster the ability to target some otherwise immune creatures with mind spells. This spell is available to genies, the third-level Academy creatures.
In the Equilibris mod, Cowardice is a first-level spell.