Infinite number of units? 1 army = 12 squads/groups max. right now. The maximum number of armies in 1 battle would be 12 using this "joint attack system".
There is no limit for how many stacks can be in one square. That means infinite or if you'd like to split a few hairs, one square containing all units that your empire controls.
There could be 7 complete armies of 12 units each in either X1 or X2.
Not everyone considers turn based combat with huge numbers of units fun.
Or at least not when they can't be organised into formations but have to be played as 96 unique and independant units.
MOO2 is probably a close analogy because the ships there could have different abilities and clickies and you would aim different weapons at different ships...
The larger battles really bogged down the game.
With the current AI not caring how many millions of upkeep debt it has, a tactical battle for a useless piece of road could easily take an hour or two.
If the AI does not stack armies like that, but only the player would, you'd be guaranteed whatever odds you wanted, regardless of the situation. That's not such a good idea, either.
the size of the battlefield is not an issue -> it's dynamic.
Magic is (theoretically) balanced for the current size of battlefield.
With 30x30 instead of 10x10, an AE spell covers 1/9 of the relative size it covered before. And since casters couldn't buff a lot of units (one by one), either,
magic users would mostly be there to look pretty or provide teleportation to the battles.
"You don't have to do it" isn't really an option. When the AI learns to do so, everyone either does or is crushed by overwhelming odds.
And no, I'm not saying it's an entirely stupid and ridiculous idea. It just has to be solid in all scenarios. IMO, breaking/disadvantageing magic is not desireable.
