Close combat casualties are removed in the same way as shooting casualties. Although casualties fall amongst the rank that is fighting, it is more convenient to assume that models in the rear ranks will step forward to fill any gaps that appear. It is therefore more practical to remove casualties straight from a unit's rear ranks.
Models that fall casualty are not removed from the tabletop immediately, but are placed behind their unit. This is because when it comes to working out who has won the combat you will need to know how many casualties have been caused during it. Also, models which are removed before they have had a chance to attack may not do so, and models that are stepping forward from rear ranks to replace them can't attack that turn. This means that any casualties inflicted will reduce the number of enemy left to fight back. You need to know exactly how many models were killed that combat round who cannot attack back.