Modelling and simulation are essential tools in defence planning, development and acquisition of systems, training and exercises, and operational planning throughout NATO and nations. In the article a contribution to a theoretical approach to the technology is provided, with discussion of definitions and characteristics, such as purpose of a model, reduction of complexity, and representation of real entities or systems. On the other hand, the defence applications are different in many aspects, e.g. objectives, time horizon, scenarios, data requirements, or reaction requirements, which leads to different utility of the model categories. Specific issues in modelling of the defence system are discussed, such as the military hierarchical structure, functional areas, operational phases, planning situations, and the decision cycle.