Stop getting hung up on the word inactive. I mean for crying out loud this topic has been talked to death in various threads.

The situation is simple, if you are down to last city and that city gets attacked down to loyalty 0 then you are removed and put into stasis until you log back in.

What is so hard to understand?

The other alternative would be to be left there with no troops, no resources effectively dead. At least if you are placed elsewhere randomly it will take you out of the danger spot you were in and a chance to start the re-build.