Fear checks lowering Morale: How's it work?

[Omnirizon]

according to the manual, any unit under the effects of Fear make a moral check every turn they are under the Fear effect (manual not handy at moment, but it is on page 80, I think, where it lists the situations in which a unit makes a moral check).

I'm just not clear on how (or even if!) simply making the Fear check lowers moral. Although this does appear to be what happens to units around an opposing unit with (at least) strong fear, even without the Fearing unit making any actual kills.