Both units used in the example have the same number of models, and aren’t elite options within the faction they belong to. They are both bog standard units for their faction and both have hand weapons as their melee weapon. Hence why they should have the same number of attacks, the Ironclad should (and do) have a better melee score, this reflects that they are a melee unit, where as the Ironwatch with their bad melee score reflects that they are not a melee unit.
I did my maths wrong, I was doing 1 in 5 hits, 20 divided by 5 is 4. Even running with your more favourable 6.66 is nothing to write home about, piercing (1) does help those attacks change into damage a lot easier. However such a unit hasn’t got many turns shooting, due to again how easy it is to shut them down. A cheap mounted hero is a threat the unit can not contend with. They drop to hitting on 6’s (again before terrain) due to the individual rule. The hero due to being an individual has a 360 charge arc and a threat range of 16"., this allows said hero to get into their flank where they can not attack from.The Ironwatch can not afford to pivot and shoot as that will reduce their already limited damage potential. A single point of damage from the hero in melee and the unit is shut down.
I did factor in Unit Strength, hence why I pointed out that the Ironwatch lose a point of Unit Strength compared to the Ironclad. Also, Ironwatch units are not going to be doing much movement towards objectives, so their Unit Strength isn’t that useful. They are a static ranged attack unit that is a bad choice.
A horde of Ironclad with diadem of dragonkind is a far better ranged attack unit. It can move and fire with no negative impact, has better melee, ranged, defence and unit strength stats. Oh, and the unit is still cheaper by 25pts, even with the magical artifact. It has less range, lacks piercing (1), and less ranged attack dice. However due to have a Ra 4+ and steady aim, it has a lot more flexibility with its ranged attack. Pivot move 4" and fire.
I’m not advocating turning Kings of War into a ranged game, but things like this shouldn’t crop up.