Also, click on right hand border of the minimap to expend the options. Uncheck the "tidy up units after battle". This will stop your smaller units getting merged together automatically at the end of the turn.
Those small units you're reffering with higher than normal valour should be merged together to create a larger higher valour unit. Retraining them will dilute them with "green" men and reduce their valour considerably, and disbanding them is just a waste.
The reason why your smaller units appear to be gaining valour is because the valour of every individual man is tracked by the game. If you had a green unit of 100 Feudal Men at Arms and after their first battle there were only 20 left at valour 1, then the unit's valour per man may look something like this:
4 4 3 2 2 2 2 1 1 1 0 0 0 0 0 0 0 0 0 0
This is because their valour, the figure you see on the campaign map, is averaged. If you commited them to battle again and only 5 remained in the unit it may look like this:
5 4 3 3 1
Which on the campaign map would be valour 3.
The units may have gained some valour but the main increase was loosing alot of green troops. If you now retrained that unit in a province that gives no valour bonuses (you would need a Master Swordsmith to give +1 valour to FMAA), the average valour would be back to 0 again. Those men would still exists but they would only start to gain from their valour once the green men have been killed off.
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