I had decided to oversee a battle, got the battle report of X dead fighters, X dead varl, which wasn't my entire party, and then I got a Death screen, where I had apparently died. I had maybe 200ish fighters and 700ish varl, lost 30 or so fighters, and 250 or so varl.
MAYBE SPOILERS
It was directly after winning the fight at the top of the broken down tower, where you find two bodies, one of whom isn't quite dead. My party descends the tower, there are more dredge outside, and it starts up a new 'war'.
Side question, do I have to chose 'rest' to heal my party, or do they just have to not fight for N days? I've been doing so, but my archer got knocked out once, and the next time I set up camp she didn't need to rest to heal.