From what i've seen, as the world grows, you have some provinces on the rim that are around 4-5k towns, and when the new province next to it begins to blossom those new towns would easily get crushed, so it MAY be there to help with that as well. Just my guess. I know the wiki describes morale in a certain way however. Lemme find it...
Morale
Morale is a protection for new players. It is calculated by the points of the attacker and the defender. A player usually attacks with 100% morale, but if you attack a player who is much smaller than you are, you will be penalized. For example, when your opponent's morale is 45%, your troops will only attack at 45% of their usual attack strength. If a smaller player attacks a much bigger player, there is no bonus on the attack. The maximum morale is 100%.
Time can also be a factor in morale calculation, in that it uses the time since the player joined the world. If a small player has been playing on a world for a long time but still has a small amount of points, morale will continuously rise until it reaches 50%.
Best I can say is, it's meant to help newer players survive 10 nukes from a larger player xD