Undead
The Undead are beings who should be dead, but who aren't. Skeletons (Longdead), Zombies (Soulless), Wights… all are undead. All are considered abhorrent by the holy and sacred powers that be, for taking up space and resources meant for the living.
Their bodies still work, but they need not function as one would expect to survive; that enough is clear. Their blood and organs (if they have any) are nominal, and a wide array of magic does not work on them. Disease may live in their bodies, but it does nothing to them. They Need Not Eat.
Due to the disconnect between their bodies and their life forces (if they have any), the Undead don't qualify for Regeneration. They do have their own sort of Regeneration, though; this is known as Reforming Flesh. The Undead also can't Transform, and can't be saved by Luck.
Quite a few spells cause the Undead problems. For example, Priests can use the Banishment spells to harm them. Some Nature and Death spells also interact with the Undead, and a couple of Elemental spells hammer them especially.
To lead an Undead being into battle, Undead Leadership is required. These fellows are considered separate from regular units (and from Magic Beings), so a fellow with 100 Leadership and 50 Undead Leadership can technically lead 150 troops.
You can also mix Undead beings into the squads of regular units (if they're not Undead vs. Demon
Demons are a special category of Undead. They are beings with perfectly functional bodies; they're just considered abhorrent by the holy and sacred powers because they're dicks. The specifics seem to vary with the nation or realm.
Anything an Undead being is immune to, a Demon is also immune to. Anything that affects the Undead only, does not affect Demons. Likewise, anything that affects Demons only, does not affect the Undead. There are also a few Demons who eat, such as Rakshasas.
Demons also use Undead Leadership, and also cause the -1 Morale penalty for regular troopers in their squads. It should be noted that, regardless of the number of Undead and/or Demons in the squad, the penalty is just -1; thus, a single Standard-bearer can correct it. In fact, Late Marignon has a national summon that's a Demonic Standard-bearer.