Lord Thane this is fixed, notation added to changelog and final notes:
Unintended Fodder Bias
Combat outcomes were previously based on percentage of units lost, which unfairly penalized armies that include large numbers of low-defense units ("fodder"). This created a bias against races like Gnome, Orc, or Undead, whose strategies rely on disposable units.
Example
A Gnome army losing 90% of its units (mostly 1-def fodder) could be judged as losing the battle, even if they only lost 30% of their total defense value, while the enemy lost 80% of theirs.
Fix
This specific victory condition was updated to calculate casualties as a percentage of total defense points lost, rather than raw unit count. This ensures more balanced outcomes across all army compositions among the races.