I don't think movement points really matter. I've seen my army fleeing when I had no more movement points left. (You can't order them to flee, but they can be routed.)

I guess it has something to do with being able to run away. If you're on an island, and there's no ship close to it that your army can flee to, your army will be dead. Maybe you lost yours because some bridge or mountain passage was blocked by a friendly or hostile army?