From the description I understand that this represents extra defensive works around a fortress to protect troops that are outside the fortress.
(During the 80 Years Wars the Spanish troops around my city of Groningen actually needed this, because the citizens wouldn't allow those troops into the city, despite being on the King's side, but preferring to keep control of their own city).
I applied this decision twice to Strallsund, but I don't see any effect on the troops of Hamilton, that are outside the city, just at entrenchment level 2. (and the gain in military control is of no use, as it is already at 100%).
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So what is its real effect?
The AI chooses this decision all over the map.
At least this way the War Supply becomes relevant, I have never seen a shortage in this resource before, but when the AI builds all these Circumvallations and Redoubts, it must be using quite a bit of it.