This article is from the Magic: The Gathering Rules FAQ, by Patrik Linell (pls@claymore.nu) with numerous contributions by others.
The Combat Phase is divided into 5 steps. Note that there is only
ever _one_ combat phase in a turn. You can't "attack with this thing, see
what happens to it, then attack with this other thing" or whatever. All
attackers attack simultaneously, and all blockers block simultaneously, and
then damage is dealt, and then combat finishes.
1: Beginning of Combat:
Instants can be played. This is the last chance for the defending player
to tap creatures in order to prevent them from attacking.
2: Declare Attackers:
The active player declares which creatures are attacking, then taps them
and pays any other costs for them to attack. Then Instants can be played.
This is the last chance for the attacking player to tap or destroy
creatures in order to prevent them from blocking.
3: Declare Blockers
The defending player declares which creatures are blocking which. Then
Instants can be played. This is the last time when changing a creature's
power, or destroying a creature, will change the amount of damage it can deal.
4: Combat Damage
Combat Damage from surviving creatures is assigned to the creatures
they're fighting, in whatever pattern their controllers want. Then Instants
can be played. This is a good time to play damage-prevention or redirection
abilities, and it's the last chance to increase a creature's toughness in
order to let it survive.
Then the damage will resolve, and lethally damaged creatures will die,
and players on 0 life will lose the game. Then Instants can be played
again. At this point it's too late to do anything very useful, except
killing creatures in order to prevent their "at end of combat" abilities
from happening.
Note that if creatures with First Strike are involved, the Combat Damage
step will actually happen twice- in the first one, only creatures with
first strike will deal damage. In the second one, only the creatures that
haven't already dealt their damage will do so.
5: End of Combat
Abilities that trigger "at end of combat" will do so, and go onto the
stack. Then Instants can be played.
 
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