Myself and my ally met on a single co-ordinate to engage the enemy, but only one of our armies fought! Why is this?

I'm afraid that two countries who are allied will not fight against a common enemy. Only one of the two countries will fight, and that is decided randomly.

So if Holland and France are fighting Spain on a coordinate, either Holland or France will fight - the other country will do nothing!

This is the same for both Mathematical and Simulated battles.

The only time that two countries will fight together is during a sea battle, when their fleets will combine to fight a common enemy.