The only information we have on this game comes from a CES show in Chicago, USA in 1987. Basically the game was to be a chess game, with the background being shown as a landscape.
Avalon Hill made its name as a board game company, and is famous for its historical war games. They still operate today and are a subsidiary of Wizards Coast.
Given their fame for war games it’s possible that the concept of Combat Chess was to be a kind of military chess game, with the figures represented by machinery of war, such as tanks and so on. How this would have worked is open to conjecture but conceptually it would have been interesting to see and play.
It isn’t known how close the game was to being released, or even completed. Presumably it had reached a demo level if it was announced at a CES show, but beyond that we couldn’t say. Avalon Hill’s computer games were not massively well regarded at the time and it may be this reason that the game was pulled.
As the company is still around today, there is a chance we may find out more about this game from someone still at the company or perhaps from a fan, but if not, then it looks like Combat Chess will be another MIA.