FWIW, I believe very few people understand the true place of exercise in fat loss.
The real issue is that once you go into extended calorie restriction, your body starts to go into starvation mode and as a result, your metabolism slows down to match your calorie intake so that you don’t starve to death, or at least starve as slowly as possible. This is why dieting alone ends in failure. Your metabolism slows down to match your intake and so you have to restrict even more to keep losing and eventually you get to a place where it you feel like crap all the time and it just isn’t worth it.
So the real purpose of exercise while dieting is to keep your metabolism from shutting down, not for the calories you burn during your exercise time. By keeping your metabolism up, you burn more calories in resting state and THAT’S where it matters. The 23 hrs a day you’re not in the gym count for way more than the one hour you are.
The only thing about exercise that matters when you’re dieting is that you get your heart rate up to between 50% and 85% of maximum for at least twenty minutes. By doing that, you’ll keep your metabolism from shutting down and you’ll burn more calories all day long than if you didn’t exercise or exercise at an ineffective heart rate.
Exercise is about maintaining your metabolism, not about the calories you burn while doing it or about muscle building.
However, on a related “muscle” note, once you get into starvation mode, your body will tend to favor burning protein over burning fat. It’s your fat stores that really have the potential to keep you alive in a famine and so your body will try to hang on to the fat and sacrifice muscle unless you work those muscles to let the body know you need them. Muscle weighs more than fat, so if all you want to do is lose weight, then by all means, starve your muscles away. But if you want to be lean and mean, keep exercising so you can lose the fat and keep the muscle.