On Live Server, Continuous Damage is focused on the LAST plane in a squadron (ie: the plane furthest to the right on the healthbar). This change was implemented in Update 0.8.5 to avoid Continuous Damage being spread across all the available planes and thus not shooting down any planes. Plane losses became much more consistent by focusing fire on the last plane.
The Closed Test keeps the "focuses one plane" functionality, but allows it to be any of the planes in the squadron. The plane could be in the middle of the health bar, or even at the front of the health bar (the "attacking" planes which are all the way on the left).
I do believe planes shot down in the "middle" of the healthbar continue to leave that gap there. Basically, each attacking flight retains its squadron integrity so later flights for followup attacks may have some holes in them. The option to send back a squadron that has taken losses would be taken care of by holding F to send...
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