Wells did not invent the idea of using abstract rules to simulate the events of a battle. Prussian officers in the 19th century were trained on complex military board games called Kriegsspiel (literally "War Games"), while there are many other examples throughout history of using the basic ideas of war either as a primitive simulation tool or, in the case of chess, a game.
But what Wells did was invent the concept of the recreational wargame, the kind of experience you find today in things like Warhammer, games which are bought and enjoyed by the wider population, not just military professionals.
Sitting around after dinner one night with his friend Jerome K. Jerome, the pair began firing a toy cannon at toy soldiers, eventually making an impromptu competitive game out of it. Convinced that with some rules and a little more variety he could make a structured experience of it, Wells - an admirer of Kriegsspiel as a concept - decided to write what would become known as Little Wars.
The game was based around two concepts: that units and terrain would be represented by miniaturised models (or at least something lying around that resembled a hill or horse), and that the movement and interaction between the game's units would be determined by a relatively simple set of rules.
The game was a success, managing to take Kriegsspiel's core concept of simulating warfare but stripping it of its sterile, arcane ruleset. It brought the art of recreating war, in an organised, competitive manner, to the masses. The use of toy soldiers as units no doubt helped as well.