For effective and proper warfare, you need to understand the difference between % Chance to Win, and the extent to which units damage each other.
In a 2:1 battle, let's say a Spearman vs. Warrior, there is a 97% chance the spear will win. This is not to say however, that the Spearmen simply smote them down like ripe stalks of wheat, he took a beating too. But that's just the thing, "97.0% chance of victory" only means that when the battle is over, 97% of the time the spearman will not be dead.
Let us analyze this battle using the information provided in "Combat explained":
With a strength ration of 2:1, in each round of combat there is a 2/3 chance the spearman will strike the warrior, and a 1/3 chance the warrior will strike the spearman. When either unit wins a round they deal their damage to their foe.
The damage dealt also depends on the strength ratio. For this battle, the Spearman will deal 28 damage, and the warrior about 14. The Warrior will die in 4 hits, the Spearman, 8.
So, to see how this battle might play out: For easy analysis, let's assume the Spear will win this one. For evey 2 hits the Spear deals, the Warrior will deal 1. The Spear has only to deliver 4 hits to win, so we can estimate that the warrior will deal 2 hits in return. Warrior dies, spear takes 28 damage.
In general, you can estimate a 2:1 battle will end up with you victorious but being reduced to 72% health. Not too bad, but still annoying.
Now, let's say that you are now facing the other end of the stick. For whatever reason (deity lvl?), you find yourself fighting off a marauding enemy Knight with your brave and noble Axemen. You quail at the odds displayed to you. You are going into war with only a 3% chance of success?!!:suicide:
But fear not, for you have numbers on your side, and that is only the survival chance for the
first Axeman.
Axe1: 1:2 combat ratio. Axe1 gets hewn limb from limb and mercilessly trampled, but knocks Knight down to 72% in process. (tripping over corpses no doubt).
Axe2: 5:7.2 combat ratio, close to 2:3. Since 1.52 patch is installed, damage dealt is the same as the first battle. This Axe too goes down in 4 hits, but manages to return the favor 2-3 times. Let's be pessimistic and assume 2. Axe2 is killed, but knight is worn down to 44%. Now we're making progress.
Axe3: 5:4.4 combat ratio. Things are looking good, it's only gonna take 4 hits to kill the knight now, just as many as it takes for your Axe to die. Furthermore, you will be trading blows at about 1 for 1, so this battle is close to a 50-50. You may win, or you may not. Since this is a pessimistic analysis, you lose. Knight takes 3 hits before delivering the killing blow to your Axe.
Axe4: Combat ratio is 5:0.2, or 25:1. The knight will go down in 1 hit, but still needs to score 4 hits on your axe. The chance that the knight can deliver 4 perfect hits is about 1 in 400,000. Needless to say, it dies.
So...It looks like it takes about 3-4 units to win a 1:2 engagement. Those odds suck, yes, but are not entirely impossible. Sure Axe1 only had a 3% chance of survival, but his sacrifice gave you victory in the end.
Another good usage for the idea of %Win vs. Damage Dealt, is the use of units that can retreat. A chariot with Flanking 1&2 will be able to retreat about 50% of the time. This is very useful, since it it can basicly deal damage for free most of the time. Even if you send it into a battle with only a 32% chance for victory, it will have a 66% chance of survival. Warfare only really costs you something if your unit dies, so retreat abilities greatly enhance your ability to fight. Wound with the Chariot, then finish off with an Archer. Even if the chariot does die, as long as it hurts its target enough to ensure that the second unit wins, it will have been about an even trade.
So, in summary, even in the most hopeless battles that you fight, you will almost invariably damage your foe. %Chance of Winning is merely how likely it is that you'll also
actually walk away from the encounter.