I don't think (most) people like war games because they like killing and death. I think people play war games because they enjoy conflict and cooperation.
Conflict does not neccessarily involve killing. Most sports are about conflict and cooperation. Conflict between one team and another, and cooperation within each team.
Most worthwhile human endevours involve conflict and cooperation. The moon landing for example, involved the cooperation of the industries of an entire nation (america), and this was in conflict with the soviet attempts, and also in overcomming the remendous difficulties of space travel.
Any challenge can be seen as the conflict of will against circumstance (or another's will).
War is the most extreme example of both conflict (with the other side) and cooperation. If it were not for all the killing and dieing and stuff war would be really good fun. This is where war games come into it. They keep all the fun bits of war and get rid of the nasty bits.