There's certainly a lot of exaggeration in the language used to describe warfare in Italy between the fourteenth and sixteenth centuries. There is no doubt that Italian condottieri, or "Contractors" didn't have an interest in committing to battle unless they were certain of the outcome. Warfare became a slow game of hypotheticals, subterfuge, positioning, and yes; theatrics.

When two armies encountered each other, the confrontation was often short and relatively bloodless; however more than predetermined agreements between captains, this was more attributable to the fact that as soon as one side appeared to have advantage the "loser" would attempt to swiftly withdraw in good order (often to the frustration of their employers; "They avoid defeat just as long as they avoid battle" wrote Macchiavelli, who as a statesman in the Florentine government would undoubtably have been frustrated by countless contractors who made meticulous preparations for battle only to decide the odds were against them and withdraw).

However, this hyper-cautious approach to battle doesn't mean war was inconclusive, in fact when one side has a clear advantage it led to very swift victories; decisive sieges in particular were very common. Between the 13th and 15th centuries, the Milanese, Paduans, Veronese and Florentines were almost continuously involved in some kind low-level warfare, bullying smaller surrounding towns into submitting in order to establish a ring of fortified burghs around their capital. Oftentimes, these sieges were perpetuated by the mercenaries themselves, who needed to be occupied lest they start pillaging; perpetuating a vicious cycle by which larger, richer cities were constantly hounding out weaker ones.

This doesn't mean the comparison to theater is incorrect, rather, it's very apt: in addition to the importance that theatrics played in perception of military strength, they were also important in diplomacy, thanks in great part due to the precarious nature of the Italian Lords' rule over their states. Especially in Central Italy, states like Pisa, Florence, Siena, Modena and Bologna were nominally Republics, if the members ruling councils detected that the fortunes of the dominant family were waning during a crisis they could easily oust them and concede defeat without a fight (in Northern Italy, on the other hand, the Italian states were more susceptible to irreplaceable strongmen).

If you'd like to read more about the decline of Mercenary Warfare in Europe at the hand of professional armies of Early Modern States do pick up "War and Society in Renaissance Europe, 1450-1520" by John Rigby Hale (Johns Hopkins University Press, 1986). If you have a JStor account, Micheal Mallet's paper "Diplomacy and War in Later Fifteenth Century Italy" could also be helpful.