Formations are groupings of troops in battle under the command of a particular officer. Troops in formation usually fight in a particular order, and various formations offer various advantages.
The shieldwall is by far the most common formation in SCA combat. This can be as simple as having everyone with a shield make a line, shoulder to shoulder. Everyone else gets behind them. Some commanders/units will add order to the back field.
Getting troops to fight effectively in formation requires a great deal of practice.