Why are troops the fuel of your dragons, and how does it work?

Troops are both the fuel and the durability of your dragons. Each dragon has a troop pool: as long as it has troops it fights; at zero it withdraws from the battle.

Two simple ideas to hold on to:

1. Always fill to the max. More troops means more hits absorbed, which means more rounds held. With 3 dragons at around 5,000 capacity, you start with roughly 15,000 troops.
2. Losses carry over. Across a fight (up to 10 rounds) and across successive waves, the defender never gets its troops back. That's exactly why chaining waves eventually breaks a target.

Maximum troop capacity per dragon rises with its Reign Level and with research like Dragon's Army. But remember: troops make you last; it's the dragons that make the difference.