Yes it is dependant on the number of units. So 10 units with DMG 2-5 each do half the damage the same group of 20 units does.

BUt DMG is also dependant on attack and defense value.
If attackers ATT value equals DEF value of defender then the damage will be unchanged.
For every point of ATT above the DEF value, it adds several percent to DMG (I think something like 5%) up to maximum of 300%, I think. (triple damage).
For every point of DEF above the ATT value the damage is decreased by few % (the same as the other way perhaps?) up to taking only 1/3 of damage value.