Many warriors in the Warhammer world are not alive in the true sense, but are magical constructs bound to the will of a wizard. The magic that empowers unstable creatures is prone to ebbing and flowing with the tide of battle. The more heavily beset the unstable creatures are, the more likely that the magic that binds them will fade away.
Source: Warhammer Armies Project: Unofficial 9th Edition (v2.2)
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Unstable units are Unbreakable, and suffer one extra Wound for every point they have lost of the round of combat by, with no saves of any kind permitted against these wounds. If an Unstable unit would normally be eligible to be Steadfast, they instead suffer 1 less Wound than they would normally do.
Unlike Unbreakable units, Unstable characters may join Unstable units. If an Unstable unit also contains Unstable characters, the controlling player first allocates wounds to the unit, then divides any remaining wounds (if any) as equally as possible amongst the characters.