I'm inclined to believe the processing & tanning of leather is an inherently dirty process and therefore prone to leaving the finished leather with relatively coarse contaminants of dirt, sand, etc. On the other hand, a simple piece of balsa or other wood should remain relatively clean after the simple process of cutting it or smoothing it to make it suitable for stropping. This might be one reason you're not seeing the same micro-scratches with the balsa that you're seeing on the leather strops.
And secondarily, I'd expect ~3-micron diamond compound to produce a decent mirror as seen by naked eye, but not necessarily as seen under magnification. This is what I've come to see and expect in using DMT's 3-micron compound, anyway, which is one of my favorites for decent polishing. More specifically, that ~3-micron threshold seems to be where the finish transitions from hazy to what appears as a mirror by naked eye. I've used it on wood strops of either balsa or basswood. I wouldn't really expect to see (by magnification) a scratch-free mirror at 3 microns, or anything coarser than that. If expecting a finer, more perfect mirror, you'd probably need to take the progression below 1 micron at least.