I think the Auto-rout is for 2 things-

1, to make it hard for a weak horse archer unit to stand up to some infantry- Example: I have 50 militia against 10 horse archers at the end of the battle. The horse archers can simply turn around and waste the clock if they're the defenders. It can be a cheap tactic so they have to discourage it.

2, (an experience I myself had) to stop the constant abuse of the charge bonus. In a castle seige, I had a high-valour 1-man knight. The enemies would assault the 2nd gate, and I would hit the rear with my knight, then tie up the infantry with some of my own, and then pull my knight out and charge again. Even though he was in the castle he routed. That too is a cheap tactic so CA must discourage it by having auto-rout.

/