Does this make their attack more effective or is this primarily to conserve org on your armor?
I generally view it as conserving org, because the infantry gets a rest after the battle (and takes time to move) while the panzers will be in combat/moving as soon as possible.
How do others manage manpower as germany in AoD?
Manpower is definitely more of an issue in AoD. To be honest, if realism is what we are after even AoD isn't going hard enough.
For example, many German divisions never recovered their manpower losses from the winter of 1941. By spring 1942, only Armeegruppe A and B had divisions reinforced to anything near to the divisional average of 1939-1941, and that was due to the Caucus offensive. Further example, in 1943 the organization of divisions was even changed such that the "full" german division was about 80% of it had been in September 1939 and even then, most divisions were significantly below their targets.
However, as far as AoD goes. If you play your cards right you won't have a significant manpower shortage until sometime in 1943. Switch to manpower friendly ministers and do a better job of prioritizing your builds. If things get really rough, start disbanding militia and garrisons in non-priority areas. Go for mobility in defense in the West, as opposed 10 MP garrisons or militia on each beach head.
Status Report
I can report to you that in the game I was referring to above, 1943 panned out quite well. I definitely had oil and manpower shortages that year but the russians were in worse shape (I was pleased to note they were having manpower issues as well, which is good considering I had annihilated 200+ divisions in 1941/42). A few pockets consisting of around 50 units in total and the soviets pretty much melted away in the south and Baku Armeegruppe Caucus was able to take Baku against a superior force by the winter of 1943/1944. Bitter peace came in early 1944 and I am now engaged in combat in africa against the americans (italians were just beginning to collapse) and am planning an invasion of india.
If I had been unable to achieve bitter peace, I would probably have been in a lot of trouble as many of my divisions were at around 70% strength in the east due to lack of manpower. I'm even having manpower issues no re: india. But with SOV gone I'm probably going to disband a few of my armies and, again, go for mobility.
- MVSN