And large battles are rarely, if ever, handle through diplomacy - because they can't be. Small missions - like the "episodes" mentioned by the developers with surely have this option. But the Klingons and the Feds are at war - so, they can't be reasoned with - and the Borg never could be reasoned with, so sorry about that. You always have to fight the Borg if they want to fight.

Plus - I have to say it:
If this game was only about exploration and diplomacy, it would, quite simply, FAIL. :p