Military tactics are incredibly important.
In every combat phase the damage your units do is calculated based on their stats, leader and terrain modifier, and a random roll, and whichever enemy units they are attacking then take these casualties divided by 1+their_tactics as real casualties. I.e. 100% tactics means that you take half the casualties.
This is how it worked in 1.1. and it is how it works now.
That battles are bloodier now is because the base damage a unit does is no longer based on myAttackValue vs. yourDefenceValue but straight out on myAttackValue (if attacker) and myDefenceValue (if defender) to the tone of 10% more damage per point. The result is that the damageoutput increase through attack/defence tech keeps up with tactics' ability to reduce damage in 1.2 where in 1.1, with attack and defence values increasing apace and the difference between attack and defence being important for damage dealt, damageoutput tended to decrease over time.
ANYHOW, the short story is that tactics is THE most important military variable at the moment. Nothing else comes even close. That doesn't mean that you should only research tactics, of course - high tactics and starting value attack/defence won't win wars - but it does mean that unless you are specifically gunning for unlocking certain units or abilities (say Machine Guns for colonisation) you should prioritise tactics research. Fortunately, that is exactly the same conclusion that anybody analysing the combat system in 1.1 would have reached so despite a change to the fundamental combat equations, tactics is king!
