Unfortunately, the AGEWiki has apparently been hacked and gutted, so the links to the "combat explained" thread are of no worth. Here is what I remember from the Wiki. A unit, like a Division, engages in combat. The elements of the Division fight individually and win or lose. If they lose too much cohesion or hits, then the element will withdraw or rout. Too many of these routers and the whole Division withdraws or routs. Thus, a few strong Divisions with your best troops beat a lot of weaker ones. Another factor is the leadership boost. The stack and Division commander can add a few percentage points to the overall combat power of elements in battle. Grant will simply do better for as many Divisions as he can get than having some of the Divisions in an additional stack commanded by say, Baker. It makes more sense to have strong Divisions led by your best one stars and in a stack commanded by your best 2 or 3 star than to do otherwise. Also, it helps to have one artillery Division per stack. These are expensive, so this would keep the number of stacks down.
I'm the 51st shade of gray. Eat, pray, Charge!