When a character is going to attack an enemy that is already downed they will automatically defend. This was actually the cause of a lot of negative remarks in the reviewer community which called it a lack of "smart combat" as said by an IGN reviewer. Defending does not reduce your chances of being inflicted with a status affecting attack. However, it does also cut in half any damage done to your PP meter. Several monsters in both games have ability to defend. For a full list of these enemies, see here.
As a command, defend is often an undesirable option to use in battle, as a defending Adept cannot perform any other action and thus will not be able to aid the party on that turn. While the effect (reducing the rate of HP loss) is useful, defend is almost never the best choice, as increasing the rate of healing is almost always a much more effective tactic as healing items and Psynergy are plentiful and, with a few exceptions, will heal much more than 50% of an enemy's attack. However, when facing bosses-or even strong enemies-and there are no other useful actions that the party member can perform (for example, if all defensive Djinn are on standby) then defend is a viable option. If, however, the objective is to not win the fight as efficiently as possible, but rather to win it in a specific way, for example, via a method that utilises the Random Number Generator to ensure a 100% drop rate on rare items, then defend is a very handy option, as an inactive Adept does not add to the "Random Numbers", allowing a slower Adept to use an appropriate Djinni to fell the enemy and complete the sure-drop method.
In the 2010 E3 expo, it was revealed that in Dark Dawn, the player is no longer set to defend if the attack they use is invalidated due to a target being felled. Instead they switch to a new target and continue their attack.