Truchses,
It's tricky coming into the middle of a long "family argument". As Mithel said, we spent months trying to figure out what GD did. The manual is no help at all. Then once we knew how GD worked, we each had different ideas on what to change to make the game more realistic.
You're right that if you set GD = 999, a bunch of techs that now add GD become irrelevant. That is one reason why Mithel's approach is not universally popular. There are ways to fix that, but they're complicated.
You're right that machineguns and mines only have effect by killing people (obviously). But basically we only have two variables to play with in designing combat units -- SA and GD. A division may only have 5 SA and 7 GD, and that (plus the ground defense efficiency) is all the information we have about it. It's very abstract.
Now, a unit with high GD values can fight several enemy units at once and survive, if their combined SA is less than that unit's total GD. A unit with a lot of machineguns and a lot of minefields can cope with large numbers of enemies much better than a unit that has nothing but riflemen in trenches. So it makes sense to give it more GD. Call it "suppressing fire" -- the machineguns and mines do more than inflict casualties, they discourage the enemy from advancing at all.
In an ideal world, you could give the unit more SA (for the casualty-inflicting power of their machineguns) as well as more GD. But in HOI if you give SA for EVERY tech that inflicts casualties, units wind up being 3x stronger than they are now, and that means battles go 3x faster. To correct that, you have to also increase the value of ground_def_eff (the percentage of hits that one point of GD will prevent). And then if a "dogpile" occurs, the casualty rate jumps much more dramatically. So then you start thinking like Mithel has done, "I'll give units so much GD that dogpiles never happen." But now many techs give no benefit at all, so why build them . . .
It's a tough design problem, to give the right amount of SA and GD, portioned out in 50 different techs and a dozen unit types, and then have the results be historical. So far I don't think anyone has a perfect solution.
The one thing I am sure of is that standard HOI doesn't give enough GD. So I am doubling all GD values. I am also sure that HA (hard attack) needs to be higher because tank losses in HOI are far below historical. Before I go beyond that, I want to do more testing.