Wound allocation is one feature of the 5th edition 40k rules system that a lot of people seem to have difficulty wrapping their heads around. So here's my shot at trying to explain it as simply as possible.
WOUND ALLOCATION BASICS:
To illustrate, pretend we have 3 Blood Angels. After being shot by a squad of firewarriors, they need to make 6 armour saves:
The first thing we have to do is divide the wounds as evenly as possible. Simple enough. Here there would be 2 wounds to each model:
Now here's were people get confused. All the models that have the same stats and wargear group their wounds and roll them together. Here the two tactical marines are exactly the same (boltguns) so they group their 4 wounds together. The marine with the flamer is different so he keeps his two wounds separate:
This is a mistake people often make. The wounds are rolled without grouping them among like models:
(wrong!)
This mistake may not seem like a big deal but here is why it matters. So the 1st marine rolls his saves and fails both. The second marine and the marine with the flamer successfully make all their saves. So the result is 2 marines survive:
(wrong!)
If the wounds were rolled for correctly, the two identical marines roll their 4 wounds together. They fail 2 and succeed in 2. They both die. So here the result is only one marine survives:
(Correct!)
As you can see, we had the same exact dice rolls in both scenarios but very different results.
ALLOCATING FOR ADVANTAGE:
It's important to understand that the player being attacked decides how the wounds are allocated. This can lead to what some consider cheesy tactics, but it is a crucial part of the game. Allocating for advantage often comes into play when you're dealing with wounds that are caused by different types of weapons.
To illustrate, let's look at the same three space marines. This time a squad of guardsmen laid into them, inflicting 6 wounds - 2 from plasma guns(red) and 4 from lasguns(yellow):
OPTION I:
4 of the wounds(2 plasma and 2 lasgun) are assigned to the bolter marines and the 2 remaining lasguns wounds are assigned to the marine with the flamer. As marine armor offers no protection against plasmaguns(AP2), the 2 marines automatically die. The marine with the flamer is the only survivor:
OPTION II:
The player could allocate the 2 plasma gun wounds to the marine with the flamer and the 4 lasgun wounds to the marines with bolters. In this case, only the marine with the flamer dies and the 2 marines with bolters survive:
To recap, understanding wound allocation can definitely help your game because it allows you to better protect your valuable weapons specialists or independent characters(option I) or make sure you keep as many members of a unit alive as possible(option II).
