Undying is a bless effect that provides blessed units with additional HP that are only used after the unit has fallen to 0HP. This will be displayed as the unit having negative hp.
If a living unit ends the battle with negative HP it will die, however if it is healed before the battle ends it will live. Undead units with Undying will always survive even if they have negative HP.
Each point of the Undying bless gives 2 Undying HP
A unit that is blessed on the strategic map (either by being a
prophet or wearing a
Shroud of the Battle Saint) can survive in negative HP after a battle or after taking damage outside of a battle
A non-undead unit with Undying and a source of regeneration can heal in the after-battle-phase into positive HP-values to survive the battle even after dipping below 0 HP.
Undying does not increase the amount HP regeneration per turn.
However it does count as max HP for hit area/limb cap damage
Luck on units with Undying only affects the initial hit bringing the unit to or below 0 HP. [TBD: Interaction with healing above 0 again to be determined.]
The bonus HP counts for spell AI targeting