First, of course, you advance the story. Equally important you get gold for the enemies you destroy and you may find other goodies like magic items on the battlefield. Indeed, it is vital to not only win battles but to preserve your core troops from destruction. Should all the soldiers in a unit be killed in battle the unit is lost permanently. This is even more disastrous when the unit has gained experience.
Experience allows a unit to carry more magic items as well as to fight more effectively.
Each unit can have three levels of skill in the game. Battles are fought on smallish 3D maps. Real line of sight and elevation effects are modelled. You can hide behind things and so can the enemy. Similarly ranged weapons can fire further down hill than up.