It's to indicate what type of troop they are and what rank.
So for example;
A1 - Archer, Rank 1
I4 - Infantry, Rank 4
C2 - Cavalry, Rank 2
H3 - Horse Archer, Rank 3
It's so that you know what everything is at a glance. I used to dislike it but it's actually really useful. I believe that you can manually edit the name of the troops fairly easily (if a bit long-winded) in the .txt files.