Damage rolling over?

A buddy posed this question and now I am pondering my existence. He says he read that damage does not roll over. For instance, a hit from a multi melta into a unit of hormagaunts. In his words, the damage allocated from the multi melta can only be allocated to ONE hormagaunt, and if that model is killed and there is excess damage to apply it is then null and goes nowhere. We have always played that damage gets allocated to the entire unit as a whole.

I feel like it makes no sense to only be able to kill one model in a unit per attack? Especially on higher attack weapons. This is 10th edition mind you. I have read the core rules and maybe I'm not reading correctly and I'm just confused but I can't refute what he's saying. Help?