bitcoin2cash, what really happens (and I base this assessment off of experience with wargames, realmVrealm in online games, history, and common sense) is that unless those 500 small armies band together and become a single big army, they get chewed up and systematically assimilated or destroyed outright. It happens so often that I am shocked when the little guys manage to pull off even short term victories. It comes down to simple logistics.

Economies of scale occur in warfare just as in commerce. It's easier to provide a monolithic vertically integrated supply chain than it is to provide equivalent support to hundreds of smaller units. There's also the psychological impact of facing superior numbers. Any sort of operation, whether it's rapid-fire skirmishes or long-term sieges can be better performed by the army with bigger numbers, assuming commanders of equal knowledge and skill.