The way combat works was changed by the "Combat Mod" (there are threads about it) a couple versions ago.
Combat is done in rounds, one after another until the combat is done. In regular BtS during a round one of the two combatants will win the round and cause damage to the other (I'm ignoring first strike effects) until one is dead (or the attacker withdraws due to a round where the damage it takes being enough to kill it but making the random chance to withdraw instead). Since the Combat Mod changes to C2C this is not the case. Now in C2C each round can end in one doing damage to the other, both doing damage to the other, or neither doing damage to the other. So what you saw would be the rare case where both units did enough damage to each other that one more application of damage will kill it and then getting the case where both units do damage to each other in that last round (and both fail to withdraw, as in C2C both units can if they have the ability to do so).
