how can you allocate dmg. can i spread out 7 dmg to 7 diff units even if none will die

No — you can't spread damage freely. Combat damage is assigned one unit at a time, and each unit must receive lethal damage in full (non-zero damage equal to or exceeding its Might) before you assign any damage to the next unit (Rule 465.2.c.3).

So with 7 damage you'd kill at most two units (3 + 3, with 1 left over to a third) if the units have 3 Might, not sprinkle 1 on seven units. You also can't over-assign: a unit can't receive more than the minimum lethal amount unless no further units remain to receive damage (Rule 465.2.c.4) — that's the only case where the leftover lands all on one unit.

Two exceptions worth knowing: a unit that can't be dealt damage at all (e.g., damage fully prevented or "I don't take damage") is exempt from the mandatory-assignment math (465.2.c.10), and effects that redefine lethal — like Elder Dragon's "any amount of your damage is enough to kill enemy units" — let you assign just 1 to each unit and move on. Tank/Backline shift who gets assigned damage first, but never let you skip the lethal-in-full requirement.