Based on the interviews I interpret "battles" in the new campaign engine to mean a set of linked missions with dynamic parameters, e.g. if squadron XYZ gets decimated in mission 4 it will get replacements and will probably consist of rookies for the rest of the campaign, or if a bridge gets blown up in mission 2 it will stay down for a number of missions.
There may also be dynamic factors during a mission, e.g. aircraft will get scrambled and get new orders based on what happens during the mission. I'm not sure if Oleg has really said this, though.