Impetus hostium milites terret.

You know mainly from the case endings:

• impetus is nominative, so it is the subject
• milites is accusative plural, so it is the direct object

So grammatically the sentence means:

• impetus = the thing doing the frightening
• milites = the ones being frightened

Even if the word order changes, the cases still show their jobs.

Because hostium is in the genitive plural.

The genitive often shows possession or close connection, so hostium means:

• of the enemies
• or more naturally in English, the enemy's / of the enemy

Here it modifies impetus:

• impetus hostium = the attack/charge/onslaught of the enemy

So hostium is not acting as the subject or object. It is attached to impetus.

Impetus is a fourth-declension noun, and fourth-declension nouns often have -us in the nominative singular.

So here:

• impetus = nominative singular

This can be confusing because in some other declensions, -us also appears in singular forms, and in the fourth declension the nominative plural can also be impetus. In this sentence, the verb helps you:

• terret = he/she/it frightens = singular

So impetus here must be singular.

Milites is accusative plural here.

It comes from miles, militis (soldier), a third-declension noun.

So:

• singular accusative: militem
• plural accusative: milites

Because it is accusative, it is the direct object of terret.

The verb agrees with the subject, not with the nearest noun.

The subject is impetus, which is singular, so the verb is also singular:

• impetus ... terret = the attack/frightening force ... frightens

Even though hostium and milites are both plural, neither of them is the grammatical subject:

• hostium is genitive plural
• milites is accusative plural

So terret must stay singular.

Yes. Latin word order is much freer than English word order because the endings show the grammatical roles.

For example, these would express the same basic idea:

• Impetus hostium milites terret.
• Milites impetus hostium terret.
• Hostium impetus milites terret.

The exact order can change emphasis, style, or rhythm, but the cases still show who is doing what.

It goes with impetus, not with milites.

So the structure is:

• [impetus hostium] = the attack/charge of the enemy
• milites = the soldiers

In other words, the enemy are not the soldiers here. Rather, the enemy's attack is what frightens the soldiers.

It is a noun.

Its dictionary entry is usually:

• impetus, impetus masculine

It is a fourth-declension noun meaning things like:

• attack
• charge
• impulse
• force
• onset

In this sentence it is the subject.

Here are the dictionary forms:

• impetus → impetus, impetus = attack / charge / force
• hostium → from hostis, hostis = enemy
• milites → from miles, militis = soldier
• terret → from terreo, terrere, terrui, territus = frighten

This is useful because some forms do not look much like the dictionary form, especially:

• hostium from hostis
• milites from miles

No, because hostium is clearly genitive plural, not nominative plural.

For hostis:

• nominative singular: hostis
• nominative plural: hostes
• genitive plural: hostium

So if the enemies were the subject, you would expect hostes, not hostium.

That is why hostium must mean of the enemies.

Yes. A very literal analysis would be:

• impetus = attack/charge
• hostium = of the enemies
• milites = soldiers
• terret = frightens

So, word by word:

• The attack of the enemies frightens the soldiers

Then you can make that smoother English if needed:

• The enemy's attack frightens the soldiers
• The attack of the enemy terrifies the soldiers

That literal step is often helpful when learning Latin grammar.