It's basically you, and NPCs fighting together and/or against each other. There are also many options like changing the skill level of NPCs. You may also play split screen in this mode as I understand. To summarize what Combat Training is, I would say that it is an experimental mode, and practice for the real multiplayer.
I have also heard you may use any kind of item in this mode (Gun, equipment, grenade, tact. grenade, etc.).