Not exactly realistic, but I think the boats only sink when you kill everyone onboard (or maybe it is when there are less than six men left like the army units) or with they rout from a battle with no place to go...
Add to this that automated battles spread the casualties amoung your units...
So it you have 20 ships but for 10 of them the crews are down to 10 men approx and you then fight 9 fully manned ships (say 40 each so a total of 360)...
You could kill 250 men, lose 200 men and win the battle. You could easily lose your 10 undermanned ships where as the opponent get way with all his ships but with only approx 12 men left on each...
I think this is how it works (roughly speaking)... Thinking out loud I wonder if ships rout during the autocalc'ed battles??
Add to that that manouvering to trap you opponents is definately best and gives us an addition strategic element in the game.
Finally I would not complain that the AI is actually playing well for once, using lots of small fleets to cause trouble and a large fleet or two to protect the small ones and dish out the pain...
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