What does "Dominated" condition in Age of Wonders I do?

When you use a Dominate ability on a unit successfully in Age of Wonders I, it becomes controlled by you and gets the "Dominated" condition. Does the condition have any additional effect, such as no penalty for bad morale, or inability to use Dominate on this creature again, etc? Or is it just a cosmetic feature.

Solution 1:

Dominated is simply an indicator, that this unit is being controlled by another creature.

The control breaks if the dominator dies or itself is controlled. E.g. you fight a battle, your unit A dominates unit B of the enemy. In the same battle or even 10 turns later, your unit A is killed, your control over unit B is broken and it returns to its original owner. (don't know what happens, if unit B is also part of the battle, but the original owner of unit B isn't)

I'm not 100% sure on this, I haven't played the orignal AoW for a long time, but that's how it works in 2 and 3 and I think it's the same in the original. Correct me, if I'm wrong.