Generally one can expect elements which have lost hits also have gained Experience Ponts (XP) and possibly Experience Levels (EL), because they have been in the field long enough to lose those XP or have been in battle, which may also have given them XP. Such an element receiving replacement points could drop their XP--IIRC if a 20 hit-point element missing 10 HP with 10 XP gets 10 replacement points, its XP will drop by 50%--, which in turn could is some few case also drop their EL, because EL is a function of the total XP.
So why would anybody ever want to add replacements to such an element, if it might lower their quality? There are two reasons I can think of:
- Command Points count elements, not hit points. Consider a brigade comprised of 4 elements, each of which is missing half of their hit points, but with a lots of XP. This brigade still costs 4 CP's to command, but might not bring the same fire-power to the table as the same brigade at full strength, but with lower XP. Having such brigades in divisions will alleviate that situation somewhat, but if all of your divisions look about the same it could result in a corps which fights hard, but is simply weak from a lack of man-power.
- Elements missing hit points become vulnerable to elimination, which means that all of the experience is lost and the enemy will probably gain an NM for eliminating an element.
I try to keep my field units up to strength an let them share their XP with fresh replacements and keeping the CP's to fire-power ration as high a possible.
I don't advocate using auto-replacement, because you lose too much control over your expenditures. The replacement page gives you enough information--although it could be better--to assess how man replacements you need. It's one of the first things I do when budgeting expenditures.