Because the AI can't use it properly, because it's broken, that's why.
I can win wars without even building units, considering how dumb the AI is and how limited one unit per tile is.
I'll speak for myself, it isn't Civilization if one can easily win it without the proper military. History tells us the only civilizations that managed to survive and prosper were those with the pointier sticks or those who were allied with those with the pointier sticks.
Also, considering how violent human history is, it's on its own ridiculous the fact that it's not only possible but also so easy to win even if one completely neglects its military.
Besides, where is the excitement of settling one city, building culture or bribing city-states and win? Have you never played Civ3 or Civ4? You should see it there, getting dogpiled on and suddenly having to fight off an huge and dangerous enemy army, those were the moments.
Not these the-AI-can't-even-conquer-my-undefended-city that happens so often of Civ5.
My personal opinion: peaceful victories are for pansies.