What he means is that, because you were Empyrean and (presumably) most of your units were Empyrean, you were giving Basium more angels every time you lost a unit in combat. Each time a living unit that follows one of the 'good' religions (Order, Empyrean, Runes) dies, he gets another angel. If he was ripping through your defences and sacking all your cities, his army would be growing bigger and bigger each time.
This fits in with the lore (good people join the angels in the afterlife, bad people join the demons) but has always seemed a bit off to me, gameplay-wise. Essentially, you would have had a much easier time of it if you'd been following AV or something. It also encourages a human Mercurian player to declare war on good civs instead of evil ones, which is very silly, lore-wise, for a guy who was summoned to Erebus in the first place so that he could fight demons.
Perhaps Mercurians should only get good guys killed by evil guys. These souls come back to Erebus for revenge. If a good guy dies of a heart attack or gets killed by Basium, he doesn't become a Mercurian.