The Combat skill affects the damage you do with any melee weapon. For the ranged weapons, check the Archery skill. If you hit someone on his head or torso, you get 1XP. If you hit someone on another body part, you get 0.5 XP. The more your combat skill the more damage you do (always) and it sometimes also affects your "regeneration" time of weapons, so you can hit someone more and faster.
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