Apparently it's not in our basic rules explanation, but it's explained on page 17 of the rulebook:

http://www.wizards.com/avalonhill/rules/diplomacy.pdf

So in addition to what I said previously, a unit cannot retreat to the province where the attack came from. Fortunately.

You misunderstand the rules, that's not how it works.

A unit can retreat to an adjacent vacant province if there was no stand-off there. Since there was one in Munich, the army can't retreat there.

Stand-offs are actually a useful way to protect provinces. I'll try to link an example from our rules.

In the rules, if I read them right, an army that was not fighting over a province, should be able to retreat to that province.

This is the 2nd game where this rule fails.. Tyr should retreat to Mun, but can only disband...

https://webdiplomacy.net/map.php?gameID ... Type=large