All your monsters had died, which is why you lost. If you wonder why the Air Elemental (your blue ghost) didn't attack in the end, it's because Ranged Units attack only from positions that are not at the front!

It works like this:
-Melee units can attack only from the front, unless they have sneak.
-Ranged units can attack from everywhere except from the front.
-Magic units can attack from everywhere.

So as you see, your ranged unit couldn't attack, but his magic unit certainly could!