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No idea what could have caused the errant submerge effect, but I'll keep an eye open.

There really isn't much of an upside to bringing more units to a battle.  Not no upside - each unit that survives the battle gets experience regardless of whether they did anything,  but this is definitely something I'm mulling over.  A couple of options that I'm toying with:

• Disabling enemies - Adding enemies  that disable your units as an instant effect.  Bringing fewer units then means risking that a significant portion of your options for the turn are disabled.  These are getting added regardless, the question is how hard to go with these.
• High Risk/High Reward - Bringing more units is tactically disadvantageous, but strategically rewarding.  Same idea as the mission exp already present.
• Options are Power - Adding powerful abilities  with limited uses. The idea being that units with these abilities are powerful enough to justify expanding the size of the squad, while the limited number of uses means that it's risky to use too many of them in smaller squads.
• Alternating Activation  - A unit that acted last turn can't act this turn (or is otherwise limited in when/how frequently it can act).  Smaller squads become far less flexible, but it's one more thing to keep track of.