Bug reports.

This only works for ballistas/cannons (and for regular units in auto-battle, including in quick battles). It never works for ranged towers, catapults, healing huts, or berserk units. The logic is as follows: a ballista/cannon is a regular ranged unit, and the AI controls it according to general rules (which include the option to retreat). The other machines (as well as units under berserk) are controlled by the AI according to their own special rules, which do not include the option to retreat.

Usually, the AI wants to retreat if there are only a few units left and it sees that they can all be defeated in one turn. It should also be noted that this question about retreating is asked only once per battle. If the player refuses to retreat, they will not be offered this option again in that battle.