More than either realism or functional, balanced gameplay, I think TW has shown they care more about: 1) doing "complex" things (i.e. usually in ways that sound nifty on paper but IMO terrible in practice), and 2) making naive attempts at hampering the game to supposedly help new players. Here's an
example of them referring to complexity. I like complexity, and I think Warband was a complex game overall, but I believe it achieved this in a more sensible way, by combining a variety of elements that in themselves were simple and more functional. Simply adding detail where it doesn't need any (especially in game design) might seem impressive conceptually but can potentially result in a stupid mess.