In this chapter, Gideon gathers an army and uses it to defeat the Midianites.
Having received the signs in the fleece and having gathered an army out of Manasseh (Gideon's home tribe) as well as Asher, Zebulun and Naphtali, Gideon is now ready to strike against the Midianites. Note that as with Deborah, all of these are northern tribes so it appears that Judah is not involved with this battle either. Midian also gathered an army in the last chapter after Gideon destroyed the altar to Baal in his hometown. It's not clear to me if they gathered an army in response to that or just for some other reason. Either way, the author doesn't elaborate on why the Midianites assembled themselves, just that they were positioned on the opposite side of the valley in preparation for a fight.
The first part of this chapter is Gideon, at the LORD's direction, selecting down his army from roughly 30,000 to 300 men. This is exactly the same principle that led to Gideon's selection at leader, and now it's at work in building his army. The LORD is deliberately reducing the army to a state of weakness so that his power would show through them more obviously.
The method of selecting the 300 seems peculiar. Removing all the people with trembling hearts is standard (see Deut 20:8, which proposes this exactly). What follows to select the 300 out of 10,000 is not. When I first read this I couldn't at all understand the difference between those who "lap the water" versus those who "kneel to drink". But I once heard a teacher suggest a pattern that seemed plausible enough for me to repeat it. What this teacher said is that if you kneel the drink, then that means you are putting your face down into the water to drink and cannot see anything around you. Those who "put their hand to their mouth" are able to drink with head up, able to observe the surroundings and be aware if anyone threatened them. It's a minor distinction, but it's the most interesting suggestion I've heard for why the LORD told Gideon to choose those who lap from hand to mouth instead of those who kneel to drink. Otherwise, it seems completely arbitrary, with the only purpose to bring down the number of troops to something too small to attack the Midianites by conventional means.
Verses 9-14 contain yet another encouragement for Gideon, this time coming from the mouths of his adversaries. Is it a miracle? I don't know, in my opinion it's hard to distinguish between miracles and natural events. By some accounts, everything is a miracle. By other accounts, everything is natural, and even for the same reason, that the LORD is the source of all things. Calling one thing a miracle (as if God did it) and another thing natural (as if God didn't) seems to create a false dichotomy, and debating whether this dream is a miracle is just arguing on which side of an imaginary line it should fall in. It contains supernatural elements (like Gideon being directed by the LORD to the right place and time to hear it) but also natural elements (because the dream and the two men talking are both ostensibly natural things).
One could say it was a natural event and not a miracle at all, but I think that kind of interpretation belies the true point, which is that it doesn't matter if it's "a miracle" or "natural". It accomplished what it was supposed to, which was to encourage Gideon to fulfill his mission in overthrowing the Midianites. Every other question is secondary. But this is something that comes up often in Christian circles. You'll hear about something like a person who has severe back problems (or whatever) and then one day the problem goes away, maybe after prayer or a word from the Lord or whatever. Does this qualify as a miracle? To a non-believer looking for proof of God, maybe not, because of confirmation bias and a whole host of other plausible doubts. But what about to a believer who accepts the reality of God but still isn't sure if it is a miracle? To that my response is as before: does it even matter? Something good happened. Saying "the LORD did it" or saying "it happened by nature". If it happened by nature, does it become any less good? If it happens because the Lord did it, does it become any more? The Lord is the source of all good things, debating whether something good qualifies as a "real miracle" seems like a foolish pursuit.
I'm glad I got to address that topic because most of the miracles in the bible take the form of "and then the dead person rose to life again" or variants to that effect. It's like, unquestioningly a miracle of some profound order. But in ordinary life, especially in the western world, there seems to be a lot of "minor miracles", things much like what we read here with Gideon, and because they are relatively low-key, some people question whether they are "real miracles" versus the placebo effect of people. Like if you have a headache that goes away after someone prays, maybe it got healed because you were expecting it to get healed. As if that makes it somehow fake.
Anyway, I should move on. Gideon comes up with a plan to have his 300 men blow trumpets and smash some jars and hold aloft torches, etc. The plan, as eccentric as it sounds, was to terrify the Midianites into thinking that they were surrounded by a much larger force (such as the 30,000 who had been encamped against them earlier) and it is a smashing success, as one would expect from the LORD's orchestration. Gideon summons men from several surrounding tribes to pursue and slay the fleeing Midianites, and the men of Ephraim capture and execute the two leaders of the Midianites. Although these tribes were not involved in routing the army of Midian, they are called up to help kill the Midianites, because there are too many Midianite soldiers for the 300 to kill them all.
As with the dream, it is "quasi-miraculous", with the 300 men blowing trumpets and waving torches (which would imply that they had many more men without trumpets or torches), but the LORD also sending fear and confusion upon their enemies.