Units with the volley keyword add +X dice when making a ranged attack where X equals the number of friendly ranged units (whether active or not) contiguously adjacent to the unit with the volley keyword.
When making a ranged attack (not a counterattack), a Unit with Volley gets +1 combat dice for every contiguously adjacent friendly Ranged Unit. The contiguously adjacent friendly Ranged Units may be in a line away from the Unit with the Volley Keyword, meaning that all Units must be touching each other, not that all Units must be touching the Unit with the Volley Keyword. It also doesn't matter whether the contiguously adjacent Ranged Units are Active or Inactive. Volley and Indirect Fire may be utilized together, so that the attack can both utilize extra dice from supporting Units and trace LoS from a supporting Unit.
Additionally, Units with a minimum range of 2 that do not have a melee icon may not attack or counterattack adjacent Units.