You don't necessarily have to bow out of each and every confrontation -- but you may lose the claim of self defense if you had alternatives to using force, most especially lethal force (which is generally defined as force that is likely to cause serious injury or death, not just guns or knives), and you didn't make some reasonable attempt to use them instead. But it's also generally bounded in the concept of reasonableness; what is reasonably likely to safely resolve the situation.
Let's maybe try some examples to look at this a bit deeper.
Guy's walking down the street. Someone clobbers him from behind, and he instantly turns and knocks the guy out with a spinning backfist. Classic self-defense, huh? He was hit, he reacted, and he didn't carry on to stomp the assailant's skull or anything like that.
OK... So, let's change things up. Guy is at a bar. He's confronted by a drunk idiot. They get to arguing about the relative merits of different versions of football. Shouting leads to shoving, shoving leads to a looping overhand right, and the guy blocks, traps the arm, and throws the drunk to the ground. He may not have a self defense claim; he was participating in the argument and the shoving match, and had plenty of opportunities to simply leave. It might be something on the order of imperfect self defense, since he didn't throw the first punch. It might go down as mutual combat.
Most of the situations run somewhere in between; maybe someone else can paint a few others that we can examine. The general idea is that we are a culture of laws and a certain level of civility, and we can resolve issues without killing each other -- or even simply pummeling each other into oblivion. And that, if we're attacked, we don't get carte blanche to mete justice out; we can protect ourselves, but are supposed to leave justice to the system.
