A lot of effort is being made to ensure that the AI in Civilization V behaves in a way that makes sense. As we watched a test game play out in front of us, AI programmer Ed Beach explained the way the AI uses subsystems to create and execute its strategies. At the lowest level, the tactical AI uses the forces at hand to win a battle on a local scale. One step up from that, the operational AI picks which battles to fight and makes sure that the necessary forces are available. Moving even higher, the strategic AI manages the empire as a whole, focusing on where to build cities and what to do with them.
At the top of the ladder is the grand strategic AI, which decides how to win the game. If the grand strategic AI decides to go for a conquest victory, the strategic AI will build the infrastructure needed to wage war and the operational and tactical AIs will choose and fight the battles. That way the tactical AI won't be fighting battles merely for the sake of fighting battles, but because those battles are relevant in the grand strategic AI's big picture. In the case of the conquest victory, the AI will be aiming to capture the other civ's capitals, which is all that's needed for a military victory this time.