Does anyone deliberately keep units understrength?

[Whacker]

Ermmm... I'll jump in here. With respect, I think you're both wrong.

As far as I can tell there is no penalty for being outnumbered, except in city sieges where you get the "dismayed at number of foes" item in the moral bit. Haven't ever seen that actually have much effect to be honest, but it was there. I'm not sure if this made it in from RTW but it was definitely in RTW.

In regards to units, depleted units most certainly do suffer morale penalties. Watch units that approach your line when under fire from archers without using flaming arrows. Try it 1 vs. 1 as well with an archer unit like longbows vs a normal infantry unit, like a mid-level spear unit. You'll notice that if you let them engage you without getting a shot off at them, you'll most likely lose and their morale will be fine as they engage you. Try it again, this time start shooting when they're halfway between your unit and your unit's max fire distance. The moral should drop to "steady" from "eagar" when they take enough casualties, by then they should be in range and engaging you in melee. Now try it again, this time turn on fire at will and let them have it as soon as they get in range. You'll notice the morale drop as the casualties increase and they get closer to your lines. On medium using this setup most of the time I can kill upwards of 1/2 to sometimes 2/3s depending on terrain before they reach my formation, and then almost always they'll invariably break right before making contact or very soon thereafter. I can also verify that in my random campaign battles, depleted strength units tend to suffer morale drops much quicker when the melee engagement begins, and will break and route much much faster than a full strength unit.

At the original question, I go to great pains to keep all my units at full strength.