Has anyone seen the AI retreat?

[Slaists]

The AI was advertised as being able to know if a battle is important or not. When to retreat or with draw.

I have not seen an example of this. So if it knows it is now acting on the knowledge.

Come to think of it, I can’t think of a single army stack backing off from a full army.

Same here: not a SINGLE AI retreat, even in the most hopeless situations; the only exception being that post patch 1.2, the AI sometimes surrenders when besieged.