Even so why would you retreat when you are still fighting for your realm and are surrounded by people on your side? Similarly, why would you risk getting killed running away when you still have teamates on your side? And I would imagine it would be difficult to monitor the health of your your whole unit when there is the enemy right there trying to kill you. This mostly applies for big battles where a small unit retreats very early.
It was quite common throughout history, and even in modern warfare for units or parts of units to retreat while the battle continues. Why? Because in armies the men bond very closely with their immediate unit in many cases, and once you've seen a few of your friends dead on the ground it can be very hard not to panic and run. Once the rest of your unit sees you running, it decreases their morale and if others turn and run it can cascade. This cascade of morale failure can spread throughout the army, or might be localized, it will depend on a lot of factors like a leaders ability to rally those who's courage is failing them.
Fleeing a battle is rarely a logical reasons response. Take it from someone that has served in the military, battle is a highly emotional things and the response soldiers is often based on that emotion. A lot of modern training is based around preparing soldiers for this and basically short circuiting their responses to facilitate the desired outcome.
Now in terms of units leaving under orders due to low numbers of men left, it depends on how you view battles. In my mind they are similar to what we would associate with Greek or Roman tactics, with the army split into individual units that often have a good few meters distance between them. Once a unit gets down to a certain size, they are less effective in the melee, and yes it can get to the stage where their continued presence would hinder the other surrounding units. If we had a concept of reserve units this is were they would come in, replacing a unit that has become a burden to the others.
