The drill
 

Just got the item 'DRILL' for the first time and was wondering what the speciel effect is for melee fighters? not figured out what it does?

Drill
+25 physical damage
-1 initiative
Special:
Has a special effect on melee warriors

Maybe it's just a special effect? Flashes and sounds when they hit something.

This bugged me as well, and it'd be important to know, since the Drill is one of the permanent magic items (you can always buy it from the Chief Engineer, it is not random).

I did not use it as I had only one troop with Physical damage, but I could use it for my undead army in my next game.

It means, that these bonuses are given only to the troops with melee attack. Here is the list of such units: Archdemon, Barbarian, Berserk, Black Knight, Knight, Demoness, Dwarf, Ent, Ancient Ent, Swordsman, Guardsman, Peasant, Robber, Marauder, Horseman, Werewolf Elf, Miner, Giant, Goblin, Furious Goblin, Orc, Veteran Orc, Skeleton, Zombie, Decaying Zombie, Ghost, Cursed Ghost, Vampire, Ancient Vampire, Ogre, Shaman, Pirat, Sea Dog.

Oh, I see, thanks! :)

Btw -the same way, the Steam Armor's +30% A/D only works on Dwarves, right?

No, the list of units is much wider: all humans; elves besides werewolf-elf and ents; Undead besides Vampire-bat and Bone Dragon; Orks besides Ogre; Dwarves besides Giant; Demons besides Demon; and Barbarian, Berserk, Pirat, Sea Dog.