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It doesn't really say that. In the Break Siege section, it says, "Units which retreat are eliminated instead of being able to return to the fortress."

It doesn't say you can't retreat to a neighboring friendly province. It just says you cannot retreat to back inside the fortress. It's possible the author assumes that all neighboring provinces are not owned by the army breaking siege. He should have made that assumption clear though. Or maybe he just didn't understand the mechanics, and managed to accidentally leave himself some wriggle room.

In the Storm Castle section it says nothing at all about the consequences of retreat.

That said, the manual is completely wrong about several aspects of dominion spread. And it's a bit wrong about blood hunting, and the turn resolution sequence, and call god, and I'm sure a bunch of other things I just can't remember right now. Isn't there a manual erratta thread somewhere?

Also: MoM and Moo and Civ II had really great manuals.