>>15814746
Pandakraut (very good modder) explains it:
It matters for multiple reasons:
1. Limits the size of the AI armies in future battles, although as you pointed out there is a minimum.
2. Gains experience for your officers and troops.
3. Gain weapons for your army.
However, none of the aforementioned reasons matter if you suffer high casualties doing it. Above what is required for you to achieve victory in a battle, only inflict more casualties if you can do it with minimal losses.
Capturing units takes more away from the AI's manpower pool than shattering their units. However, in the vanilla game you don't get weapons for the captured units. You would need to be playing with one of the mods to get weapons from captured units.
If you are continually wiping out the Ai's forces, then yes the quality of their troops degrade, but their quality will continue to increase as the campaign progesses. Basically, it limits the increase in quality.
The game scales to the size and type of your brigades. If you bring more infantry, than their infantry brigades will be bigger, if you bring more cavaly, than their cavalry brigades will be bigger and if you bring more artillery, than their artillery brigades will be bigger.
https://steamcommunity.com/app/502520/discussions/0/2590022385666814125/
tl;dr: Try to kill as much as you can while limits your losses