No loss never gave any special reward in whole game, except medal for no loss battle on start (50 battles, of 300+ in game isn`t even 15% game time and starting battles were ridiculous comparing later in term of difficulty).
I think it`s started as way to preserve units that werent available in game inn sufficient amount for hero lds (AP/CW you finish Bolo island quest go back to Debir return stone and get 5 paladins in some shop and you can lead 10 or more, or opposite go to Montero and find alchemists in 4 shops all together 5000+ of them, who the f..k need 5000 alchemists ???). So no loss is strategy itself keeping your army in best possible shape. You defeat enemy, but later spend some turns to resurrect losses before finishing that last pathetic enemy survivor and continue on next battle does seem a bit gay but fro any who want to go high score going back to other islands in search of units to restock this was only way of achieving it.
@tiberiu Mentioned infinite gift on inquisitors, sacrifice+time back . . . all great way to keep your army on full lds, but some1 had to figure that mechanics out it didnt come in game manual so i give respect to players who figure them out.
As for game balance features, better that then massively using cheats as is common in this time when every1 want all and right now without any effort.
In CW part of forum i answered on post where question was `How to easy defeat bone dragons on impossible, i`m going for no loss`. So contradicting himself he want easy way to do something, on impossible difficulty. That kind of players are retarded and stupid not those who figure out how to use what they have available in game rules to finish it (all no loss and other unbalanced things, it`s in game mechanics players didnt add it themselves).
EDIT : Afterthought about my better AI statement, i`ll advertise HoMM3 babies mod here a bit so pls be patient : Intellect description states that every point give you spell dmg and every 7 point 10% bonus, and every 15 points some spells last longer. WRONG this mechanic doesnt work in and KB game so far, but in HoMM3 mod it works great Mat there made interesting AI changes so high Int heroes can use doom/blind/stone skin all spells with lasting effects to more benefit because this change. But he also added some bonuses to enemy heroes - if attack is highest stats their units have bonus crit%, if defense then all units have some +resistances%, if intellect then enemy heroes have double spell cast like higher magic skill (all enemy heroes have some bonuses as if they have some skills or items equipped to improve their army). So example - enemy necromancer hero in Gray wastelands have 40 intellect can cast 3 spells per turn/have 20mana/turn regen and blind 2 mine units for 5 turns and cast mass weakness for -80% dmg. This all seams like acts of real human player and every enemy hero battle in that mod were really tough and interesting. i had some old saves without HoMM3 mod changes and i checked them. Every hero had same army as in mod leadership vise so mod didnt simply give x2 to x3 multipiler to enemy troop and make them harder to defeat by adding more enemy, but really made some great changes to game mechanics and AI of enemy heroes. Suppressing/upgrading items good luck towers are much harder, enemy elf heroes have quick draw skill so range units have +initiative and crit%, some magic heroes lower your resistances and spells are interesting to decimate your army
, 2 new wives and completely changed kids (now they give individual bonuses) expl : marry Mirabella give bonuses to human units and get kid Ingham - priest/inquisitor +1moral/speed/initiative/-10% leadreship cost/+crit%/+20 hp or Edric - +8% defense to all units and griffin +1moral/speed/initiative/-18% leadership cost/+crit%/+18%hp. Every wife have 20+ kids so possibilities are great (or crap depending on your luck because you can play Warrior hero and get kids with bonuses to intellect and spells, or go Mage and get att/crit% and other battle bonuses useless to mage class
Some other changes in HoMM3 mod - rage spirits changed rage skills and max lvl is 40 GREAT fun
Mana/rage income =0 after 20 battle turn, so no more 100 turn battles to resurrect all units, what mana/rage you have at 20 turn that is all you`ll have to do with.
There i did no loss just to check if i can since it was much harder then impossible play in original the Legend, but it was great fun because i changed 8 wives and to get all kids you need 40 battles (1 kid after 10 battles then kiss and w8 for next
with each wife (care to get kids with Rina she must stay in human form, after you get 4 kids change her to zombi and get great undead bonuses), and i changed my army completely 8 times. Did i go all archer army for 100crit% NO, did i go summoning galore to choke enemy units in summoned crap ? NO But i had great time trying all new things in game this mod brought.
So no loss is personal choice and it doesnt mean it`s obligatory but might be fun to see if you can manage it.