A big difference between one wargame and another is how much attrition occurrs in battles, for the winning side. For example, in 4000 AD the bigger fleet eats the smaller fleet at no loss (equal sized fleets can't fight). In Diplomacy too, there is very little attrition, although occasionally a complex position may force you to give up terrtiory or, very rarely, a piece, for an advantage elsewhere. In Risk, you can expect to lose at least some of your pieces in an attack.
Apparently, Twilight Imperium the attrition is so bad players try to avoid attacking each other and instead simply 'turtle'.

One interesting way of approaching this whole thing is to say that, when the battle is over, the winning side recruits any surviving units from the losing side. This is easy to justify in contexts where the armies are mecanaries- obviously they draw up a new contract. Of course, the winning side could still have a net loss on the battle if it was very casualty-heavy.

Does this mechanic occur in any games you know of? I have heard something similar exists in Japanese Chess, but I haven't checked that game out.

What do peopole think of the mechanic in general?

I don't know if it's really correct to say that people "turtle" so much in Twilight Imperium as that they don't get into combat until a) it's necessary, and b) they know they can win without putting themselves at a major disadvantage. There are enough neutral planets that there is rarely need for military conflict until at least a third into the game, and quite possibly later. From my experience I tend to only need to get into one or two battles a game, and that still includes fairly aggressive expansion.

The important thing to take into account is that Twilight Imperium is not a game about military conquest. Destroying your opponents does not have a direct effect on whether you win the game or not. Points are awarded in a variety of ways, but it is rare that they require getting into a battle (and the ones that do are secret objectives that are very difficult to complete). Getting points typically means diverting vast amounts of resources that could be going into further defending your empire for the purpose of completing your objectives.

(These comments are on Third Edition and don't apply to previous editions.)

Fair comment. I haven't played TI, so wouldn't know.

Maybe I shouldn't have said 'war game'. After all, plenty of games involve combat without being war games. Civilisation has losses roughly equal on both sides. In Attila, the losing tribe is wiped out at no cost to the winning tribes (of course, you aren't playing as a tribe, which complicates things). In D&D, each combat at the group's Challenge Rating is meant to exhaust 1/5 of the resources they had when they were at full strength. Of course, in D D&D the DM can add defeated and alive enemies to your followers, or you can turn defeated and dead ones into undead under your command.

There are some in which you can obtain a "change of allegiance", as it were, but these are usually of the 'Medieval' or 'Renaissance' time periods, since that was common back in those times. In fact, the SPI/S&T Series of the "30 years War" Quad & Magazine games, even 'back-printed' the 'Artillery' in those WITH the opponents 'colors', to represent "captured" GUNS that could be turned against their 'former' owners! Back then, those were almost immobile during a 'Battle', due to their HEFT and the amount of time that it took to set up or deploy them. Even long before this during 'Ancient' times, then some "Mercs" employed could be induced to join UP with the opponent due to current circumstances at the moment. I believe that there are even some Japanese 'Battles' during their 'Civil Wars' in which this took place as well. For "Game Designers", then they usually would cover this with an "Exclusive" Rule of which certain results could create this 'setting', depending upon the actual 'Historical' outcome. I've even seen it broached in a few 'console' Games such as the SNES "Liberty or Death" game of the 'American Revolutionary War', where you can "bribe" an opposing 'Officer' and even 'turn' them onto your side! As for 'stragglers' and the like, then there are even some games that cover this in one form or another, such as reducing a 'Unit' gradually over time. You are able to 'recover' those as well, mostly when you sit tight or make a 'Morale' or some such "recovery roll".

Probably the most important reason is that a unit "lost" in a battle may not represent the loss all of the members of the unit, or even a large percentage.

It may represent the loss of enough to cause the unit to lose battlefield cohesion so that it ceases to be a fighting force. This percentage can be much smaller on the order of 10% or less.

As for mercenaries switching sides, it does make sense in strategic level games, but less so in a more tactical level game. This would represent recruitment of mercenaries after the battle--who after all are looking for someone to pay them, but it is something that can only be undertaken after the battle has been won.

If I remember correctly Successors allowed mercenaries to switch to the victorious side after the battle.