From The Heroes of Might and Magic III wiki

Most shooters only do half damage when attacking someone in melee. They can easily be forced to do so by placing a unit next to them, in which case they are forced to go into melee (unless the hero has the Bow of the Sharpshooter equipped). However, it is a fairly common trait among shooters to have "No Melee Penalty".

A unit that shoots twice only strikes once in melee so damage is reduced even further to one quarter normal.