Well... First of all, that's the sort of arena you're going to fight when you'll upgrade or suppress rebelling items (items that have morale that went to 0).
The gremlins are standing on 2 types of towers. The red gremlins are offensive and they will attack your army with lightning and various debuffs or cast divine armor on their own troops. The brown gremlins are "friendly gremlins" and they cast spells like slow, divine armor, summon creatures and such.
In such cases, the sooner you destroy the towers, the better (later on that friendly gremlin tower can be exploited for killing the summonedunits while you ress your own army, but that's another matter). Especially the towers with red gremlins. Some suppressions and upgrades require you to beat a tough army. So it may be wise to leave it for a later time when you get more units, better spells and better equipment
