No, you don't have to actually play out the battle with dice by following all of the rules. That would be tantamount to watching the tree fall.
Rather, you expect that the outcome of the fight should be exactly what it would have been if you had played it all out with dice. It's like saying, if you know a tree falls in the woods, but we're not directly observing it, then we expect everything else - the air, the ground, and all of the furry woodland creatures - to react in the same manner that they would react if we had been watching.
If the PCs fight the guard, and it turns out he has 100hp and +27 to hit for ~35 damage, but the guard is later defeated by some goblins, then we don't expect those goblins to have 10hp and +2 to hit for ~4 damage. We expect that the outcome of the fight should be very close to what it would have been, had we actually played it out. You can't change the outcome of that sort of situation merely by watching it.