In the "Assault" example on page 16, the player deals 200 Casualties to the neutral city of Froli. Froli does 100 Casualties and 1 Victory to the player. The example concludes the battle with the player winning since Froli's strength has been reduced to zero.
In the FAQ, page 2, under "Neutral Cities", second question: "Q: If a Noble Assaults a neutral city, and the city gets 2 or more Victories than the Noble, does the Noble die, as per Noble vs. Noble combat? A: Yes" If the neutral city had gotten 2 Victories in the page 16 example, it would have won the battle.
So..1 Victory more than the Noble does not force a retreat, but two victories kills the Noble. Is this how y'all are playing it? It's in the rules and the FAQ, so we're doing it that way, it just seems odd that 1 Victory is nothing, but two is a killer.