When having a Zhonyas Active and two units defending battlefield, an attacker comes in with a unit with enough might to kill both the defenders through simple combat damage. Does the controller of the defenders get to pick which unit to apply Zhonyas to, or is there any sequencing in handing out combat damage by the attacker which can influence this?

The controller of the defenders gets to choose which unit to save with Zhonya's Hourglass. The attacker's damage distribution order does not restrict this choice.

According to RiftJudge FAQ #6895 and RiftJudge FAQ #1042, when multiple units die simultaneously from combat damage, the controller of the replacement effect (Zhonya's) chooses which death event to replace. Even though the attacker assigns damage to units in a specific order, all combat damage is dealt simultaneously (Rule 443.1.d.1.a), meaning all units that receive lethal damage die at the exact same time.

The Sequence of Events:

1. Showdown/Combat Damage Step: The attacker assigns damage to your units. While they must follow rules for lethal damage assignment (Rule 443.1.d.3), this assignment is not the same as dealing damage.
2. Simultaneous Damage: All assigned damage is dealt simultaneously.
3. Simultaneous Death: If multiple units receive lethal damage, they all enter the "dying" state at the same time.
4. Replacement Effect: Because Zhonya's Hourglass is a replacement effect (Rule 366), it intercedes at the moment the units would die. Since the deaths are simultaneous, you, as the controller of the Zhonya's, choose which specific unit's death event to replace.

Important Note: You must have already flipped your Zhonya's Hourglass face-up during the Showdown phase (before damage is dealt) to have it active. You cannot react to the damage being dealt itself, as that process does not pass priority (Rule 5489).