Morale in BattleMaster can refer to several different topics. Chiefly, it refers to either region morale, or unit morale. Although they both refer to the general happiness and spirits of a group of people, they are very different topics. This page serves to discuss the basics of each topic, and links to pages where they are covered in-depth.
The people of a region are not mindless robots who keep their thoughts only on their work -- they are greatly affected by happenings in their region and their realm. Catastrophes like looting and battles can make them extremely unhappy. If their morale gets too low, then they'll start getting desperate. Unhappy people are more likely to go on strike, are likely to become less loyal to your realm, and more difficult to control. They may even rise up against your realm and declare independence, or throw in their lot with one of your enemies!
Morale is given as a percentage, with 100% representing perfectly happy people. It is a reliable gauge of how happy or unhappy the people in a region are, but it says nothing about the reasons for their unhappiness.
(See also: Region)
The morale of your troops has great influence over how it behaves. Troops with high morale will fight fiercely, and stay with you even through the most fearsome trials and tribulations. Troops with low morale are more likely to flee, will fight half-heartedly, and are likely to turn on you if treated badly (especially if you do not pay them!) If they abandon you for not paying them, you will lose honor points.
Your own treatment of your troops has a significant effect of how happy they are. If you entertain your troops, use them wisely in battle, and keep them near home, they are likely to stay happy. If you take them far from their homes, neglect their equipment and pay, and misuse them a common laborers, they are likely to get quite angry with you. Your own Leadership ability, as well as that of your Captain (if you have one), will also affect their overall morale. Of course, not every soldier is the same -- some of them mind being far from home, for example, while others like to get out a bit and see the world. Soldiers are generally not shy about what they like and what they don't: The wise commander who pays close attention will have a good idea of what will make the unit happy and what will be demoralizing.
Troop morale is listed as a percentage. If it starts getting dangerously low, the text will appear in shades of red, depending on how angry your troops are.
There is some interaction between the two kinds of morale. Every soldier comes from a region -- it's where he was born, raised, and trained. When a troop leader hires a unit in the first place, the soldiers in that unit will have the same morale as the region from which they come. High morale regions will produce troops in good spirits, and low morale regions will produce troops who are surly and likely to defect unless they are treated well.
Another issue to consider is the morale of the troop leaders themselves. For obvious reasons, there is no game mechanic to affect this: this is pure leadership. Realms which are secretive and harsh may find themselves with significant morale problems -- their troop leaders may not participate as much, they may leave the realm (or the game altogether in extreme cases), or they may betray the realm to its enemies. Openness, leniency, and a thriving role-play tradition can all keep morale high, and produce dedicated and loyal troop leaders.