It happens on battlefields. Battlefield is usually chosen by the attacker. Battle is over when one of the sides loses morale - units not only lose morale along with losing life, they lose morale because of absence of victory locations under their control. There are 3-6 victory locations on map and apart from granting morale bonus by owning them (and of course granting a leak of morale by not owning them) they grant you special features - village usually replenishes stamina of your soldiers in vicinity, guard posts lets you cast "cloud of arrows" spell... Features granted are always pretty reasonable.
You can win a battle even with a smaller army by smart victory locations management.