Yes, rounds pass during combat. There's no distinct combat phase. The goblins might taken actions that directly attack, or they might find other ways to deal with a threat.
In terms of probability. remember that the player can assign dice wherever they want. If they roll 4 dice (action, danger, harm, and twist) then there's an 80% chance that they get at least one 5 or 6. In a good position, success (a 5 or 6) does 2 Harm. So a monster with 2 moves and 3 armor (which is moderately tough) could go down in as few as 3 turns.
And that's assuming this creature keeps fighting to the end. Often creatures lose a move or two and then don't have any that make sense in the context. That means their morale breaks and they retreat.
The goblins might not have things go their way, and they may not be willing to face the harm and twists that putting their best die into the attacking action will require. The players should definitely be prepared to make compromises and tough choices in combat. Fighting isn't easy in Goblinville, but the constantly changing stakes from dangers and twists means that you're rarely in the same situation for more than a few rounds.