Much as collateral damage was supposed to eliminate SoDs, it doesn't in practice, because of the cap on the number of units that take damage. Consider if I have 16 units. I could stack them all together, or split them, say into 4 stacks of 4. Imagine the AI now hits me with a couple of catapults, damaging 6 units at a time. With one stack, 12 units take a little damage, but I still have 4 strong unharmed units to defend. With four separate stacks the AI can hit one, leaving 4 substantially damaged units which are easy to pick off.
Add to that the way you need a mix of units to counter different attackers (e.g. spears to counter mounted. Axes to counter melee), and you can economise on these specialist defenders. You need a couple in each stack you have, so if I have four smaller stacks, I need more defenders. Now consider medics. OK there are promotions which affect surrounding tiles as well, but it's still simplest if I can keep one stack with a good medic buried somewhere in it.
The only way collateral damage would eliminate SoDs would be if it affected ALL units in the stack, no matter what. It doesn't however, so the single SoD is most effective.