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Though in real life for pre-modern time wars, there were less "elite" soldiers than a lot of people think (mostly because of video games, movies and legends/mythology, even books) and many wars were fought on intimidation and battles of pre-war numbering. That's why powerful kingdoms and empires tried to build large armies, even with conscripted soldiers, even if the morale would be low. It was in the hope that it would be a deterrent against an uprising or a foreign power trying to declare war.

It's a little different for modern wars, because of force multipliers by way of equipment, even non-weapons like vehicles and nightvision, and the fact that many real soldiers have very efficient training techniques and their opponents usually don't have the same luxury (terrorists, for example, typically don't even hold rifles properly, nor maintain them).

In real life, armies were (and actually still are) built on troop types rather than tiers. "Elite" troops exist, but in reality they aren't untouchable. The majority of all armies, even today, are still comprised of grunts and other regular soldiers. Armies adapted to find and exploit the weaknesses of these elite troops, so that commanders can defeat them even without having to match elite versus elite troop types. Knights in heavy armor might as well have been wearing no armor against warhammers and bodkin arrows, elite horse archers were stoppable with proper infantry formations and the use of traps or other things, and the powerful longbowmen of the English were easily destroyed by flanking attacks especially with cavalry.

In Floris, a peasant recruit will never ever ever be able to kill a tier 7 infantry unit no matter how hard it tried, not even with luck, unless the tier 7 is bugged and is not moving or fighting back. I remember being able to kill 40 or more tier 3 and below troops very easily when I was wearing tier 7 equipment. I found this to be very boring in fact, which is why I stopped wearing anything higher than tier 5 equipment (I mostly stay in tier 4). The lower tier troops' attacks will simply never do more than a tickle against the armor of the tier 7, while the tier 7 will likely kill the peasant in a single hit. This is why people complain about the tournaments being too hard, because the stats of many of the tournament junkies in the game are elite level. In real life, even peasants had a chance to kill these supposed elite soldiers, if they do it right, especially with luck or even the proper tactical command.

Real world example of bigger armies winning wars, many of the former Mongolian conquered states surrendered and did not even put up a fight, because the Mongolian horde was significantly larger than most cities, townships and forts trying to defend against them, not to mention their reputation of brutality and tactical prowess. They also swept through so rapidly that their opponents could not summon reinforcements to come to their aid, so the smart thing to do was to submit in order to avoid annihilation. In real life in those days, if you had an army of 800 and your enemy brought out 2,500, you should considering terms of surrender instead of fighting, regardless of the skill of your troops (though there were cases, such as Thermopylae, where soldiers fought against amazing odds, but those usually ended up in defeat, which is an undesirable outcome IRL.

In this game, if you had 800 on your side with mostly higher tier troops, which is how players naturally play, while your enemy brought out 2,500 with mostly average and low tier troops, which is how the AI normally raises armies, the battle would be pretty boring.

Also, the way the auto-calc works is that some lords will retreat from a battle before they're completely wiped out, which is why you might see some lords fleeing the scene of the auto-calc with some knocked out troops and a handful of troops that are still alive, especially if the battle was close (like 2000 vs 2000).