Oh yeah... Titans hurl lightning bolts precisely at five peasants. What sticklers for accuracy! Knights, instead of charging into the thick of unprotected people and hacking away, will challenge each peasant to a personal duel.
And the peasants, swarming in a group of 200 (and there's enough room for everyone!), kill angels and devils without batting an eye.
And yet... why? What is the point of this?...
1) The issue of space has been a realism problem since King's Bounty, and it hasn't gone away. If you take it into account, you need to drastically reduce the gap between the strength of different levels.
2) The Titan strikes with lightning. But it's not infinite. :)
Similarly, a knight won't be able to strike faster than, say, 5 units per turn, no matter how good his defense is.
3) To avoid such precise targeting of exactly 5, no more, no less, you also need to introduce a range, just like with damage.