A model can fight if its base is touching the base of an enemy model even if it only touches at the corner. Even models attacked in the side or rear may fight. If you wish, they may be temporarily turned in the ranks to indicate that they are doing so.
If a model is touching more than one enemy, it can choose which to attack. If a model has more one 1 Attack, it can divide its Attacks as the player wishes so long as this is made clear before rolling to hit. For example, if faced with an enemy Hero and an ordinary enemy warrior you might decide to attack the warrior because he is easier to kill, or you could take the outside chance of slaying the Hero.
In the case of cavalry mounts that have their own Attacks, such as Warhorses and Giant Wolves, the rider's Attack and the mount's Attack are worked out separately. This means that some cavalry models have two lots of Attacks: the rider's Attacks and me Attacks of his mount.
In any case, models in base contact with the enemy may not choose to avoid attacking their enemies.