Keep these posts coming! They are excellent stimulants of interesting discussion/responses.
For rules/games with figures losses, I have adopted a technique suggested by a good wargaming friend and have bases with fewer figures on them—he often jokingly suggests snapping the figures off to represent casualties! That way gaps occur in the ranks until a full base of figures is lost. The economy of plastic figures helps this immensely.
I also like casualty figures as markers. Makes a game look more like one of those photos from the period; I think people refer to them as paintings? It's a shame that Ykreol went out of business (I assume). Yves' RIP figures are/were a brilliant, specialist production line.
As already suggested it would depend on the rules and size of the units. In more recent rules, units of figures could represent a battalion of 400 - 700 men, so could be represented by as little as 12 figures depending on the rules Hits on a unit are not always just casualties, they could also represent loss of moral, so to keep the rules from turning into something more complex, just keeping the unit as a whole on the table and marking the hits can make valid sense. We also know that depth in wargaming units is really not representative or true depth and that units in battle would reduce ranks to maintain frontage so again keeping the entire unit on the table would more clearly represent this maintaining of frontage that may not be possible if figures are removed from an already limited number representing the unit.
As the scale comes down then yes it makes better sense. I think Donald will also agree we took this path of leaving units on when doing demonstration/show games so the spectacle of the wargaming table remained just that. ie keeping the look of a big game. Units were removed once destroyed or routed.