Every major character in the play packs up and heads for Cyprus, where we've been promised a bloody battle. And then, due to inclement weather, there is no war. We, the innocent and unknowing reader, accept this with a little confusion and move right into the sordid plot.
We might forget about the whole war thing until Othello's crucial monologue in Act 3, Scene 3, in which he describes the components of the battlefield – horses, troops, trumpets, banners, cannons – and how they are all lost to him now that he knows Desdemona is unfaithful. Here, these implements of war become symbols of Othello's sexuality. Think about it – what's more manly than a big collection of warlike objects? Desdemona has deflated him; he is un-manned by her betrayal.
So what's the conclusion? We got our war in Cyprus, after all; it's just that the battlefield turned out to be the mind, not the literal battlefield. If all is fair in love and in war, then it's a bloody battle indeed going on in Othello's psyche.