Can you split or merge units?

I don't think it is possible.  Not sure if it's been suggested yet, but it should be.

A party of units remains a party.  Once they are made, they are grouped together. That's why they have such steep discounts on production.

Here's a question once a party of units (4) is wounded (now 1) how do we get them back to full strength?

If we have no mechanism for this we need one..

right now disband and recreate is only option..

he is a idea, while in town add a restock/resupply fee (appropriate costs mats, pop, and coin)  as long as town party is in has appropriate structures (archer needs archery range etc) and of course have it take a few turns... just my thoughts on matter..

I agree that this needs attention.   Unless a military unit is destroyed it can, back where it was first raised, bring in and train replacements.   There should be cost for this.

I also think you should be able to join units that are of the same type (same nation and equiped alike) to form larger units.  I don't see why this should not work - three batalions join to become a regiment for example.   If there needs to be a cost then so be it. 

Both of these changes would make the game more fun.

Resupplying units definitely should be allowed or at least the upkeep should be reduced by the number of people slain.

As a party heals, it should go back to full strength. I'd say it's a bug.

I'd definitely like the ability to merge units - at the beginning you are likely to have built a few individuals of the same type, and it would definitely be nice to merge them, if only to keep the stacks in a square a bit neater! The penalty is already in-built (the cost). Not sure if there is a coding/engine reason why not, but doesn't seem to be a gameplay reason. Could be stronger reasons to prevent splitting groups up (just to keep the head count/spamming of units down a bit).