The second sentence is a slightly neutral sentence that leans towards the total number of wounds is divided between the various Fearless units involved in the fight. Of course, when there is only one Fearless unit, it eats all the No Retreat wounds and this is the most common scenario. The way it was misinterpreted was by trying to somehow use rules that affected the losing unit's Ld for Morale checks as a justification for setting up an exploitable situation vs. lists with multiple Fearless units, especially when dealing with MC.
When determining assault results in a multiple combat, total up the number of wounds inflicted by each side to see which side is the winner. Every unit on the losing side has to check their Morale (they all use the same penalty, as described in the Morale section). (5th BRB, pg 41)
Units that lose a close combat (ie, they suffer more wounds than they inflict) must pass a Morale check to hold their ground. If they fail, they must fall back.
Units taking this Morale Check suffer a -1 Ld modifier for each wound their side has lost the combat by. (5th BRB, pg 44)
Bold emphasis added.
Notice, it is only referring to the modifier to the Morale Check. What did the No Retreat rule say about Fearless units? "These units do not take Morale checks..." Oooooops! No Retreat has nothing to do with morale checks, so the claim that because all non-Fearless units that lose CC must take a Ld mod based on how badly the combat was lost has got nothing to do with Wounds that Fearless units that lost CC must take. Still, GW does write some bad rules, so maybe, just maybe, they meant only the slightly less likely interpretation that was used by rote in 5th, namely all Fearless units each took the number of wounds that the combat was lost by.
Okay, so what happens if we have a CC with three Fearless units on one side (say two MC and one 'patsy' unit). After some setup, the attacker charges into CC with several units of his own, including a pair of two model squads. The sole purpose of these squads are to put one model into B2B with a MC and the other into B2B with the 'patsy' (and also swings at it). When it comes fight time, the two MCs score a number of wounds with their 4A, 3+ to hit and 2+ to wound, but at most can each only kill two models maximum. In the meantime, the pile in on the 'patsy' squad nets twelve casualties, which makes the loss at eight wounds for the three Fearless units.
Two choices here:
1. Each Fearless unit takes eight saves vs No Retreat wounds
2. Each Fearless unit takes two saves vs No Retreat wounds and two more NR wounds go on two of the units.
The attackers can hit the MCs on 4+ and wound on 6+, so the MCs do have to take the hits. In the first case, each must take eight armor saves, which is the equivalent of (8 wounds) * (2 swings per hit) * (6 hits per wound) = 96 swings. Now, let's assume that our models are A1, +1A (CCW), +1A (Charge) for a total of 3 Attacks....which means each MC just got swung at by the equivalent of 32 mystery models that just popped in, charged them and popped out or a total of 64 models on those two. In the meantime, despite being in a multiple combat with five units, they can only do damage to one unit each with a limit of four totally wounds between them. The 'patsy' only got 18 (6 models).
Going with the second way, at max each MC will only have to take three saves (and most likely five together). This would result in (5 wounds) * (2 swings per hit) * (6 hits per wound) = 60 swings or 20 virtual models (up to 72/24 if three wounds each). Still a stiff penalty for getting caught out of position and set up, but while "adding" 20 virtual models is rough, "adding" 64 virtual models is insane. To put it in perspective, my 5th Ed list used 40-45 models and many didn't have +1A from CCW, so that essentially counted as virtually my entire force on each MC in CC for that bit of No Retreat.
While yes, that wasn't easy to set up, and yes, it wouldn't be common in any case, it is still an exploit. Yes, I set up the double MC a few times, but mainly I just used it to blast one MC because it was what I could get.
Given the potential for exploiting the rules as interpreted (although the temple singers kept chanting "Look at the morale section, it's RAAAAAAAWWWWWWmen!"), this would sink any claims for the first option above. Why? Because games design does not include purposeful exploits. The only thing that kept this entire situation in check was the fact that this issue didn't happen often enough in the normal course of play.