I heard that during the 1940s, the allies did various estimates of how long a soldier would remain combat effective, with the US estimating ~250 days and the British (whose troops had longer rest periods) ~400 days...but how did this mesh with the length of service?
What I mean is, the vast majority of soldiers were conscripted for the duration of the war so how did the armies take the reduction of combat effectiveness into account?
Did they just accept that soldiers would be worse after X days or was it possible to reset the soldiers by retraining etc (or giving them extended leave periods etc)?
In ideal circumstances would they have demobilised troops who had reached this cut off point?
The Western Allies used rotation to accommodate time-limits for effectiveness. The truly remarkable logistics and development machine that created in the UK, Dominions and the US meant that there were rarely (at the beginning of the war) and basically never (thereafter) such dire shortages of men or material that high commands couldn't rotate as a matter of resources.
Rotation from the front lines was generally individual in the case of air forces -- the famous 25 mission quota for US bomber crew members, for example -- unit-based for ground forces, and vessel-based for sea forces. Individuals who were rotated off the front lines would use that time for leave and for other duties. Ground units would re-equip and integrate replacements for soldiers who'd become casualties or had been transferred to other units. Vessels would undergo overhauls of varying sorts.
Differences in doctrine, but more importantly differences in resources and necessity, led to a rather different approach to rotation by the Axis and by the Soviets, and eventually to a policy that units fought to defeat (death, surrender) or victory.