Re: Difference Between Difficulty Levels:
Campaign :
Medium : good for very slow players that like periods of peace now and then.
Hard : reasonable AI aggression, everyone'll want to wage war against you, but still quite fun.
Very Hard : Kamikaze AI. They just throw everything at you.
Factions will expand a little bit faster at higher difficulty AFAIK, but killing you if you border them is their priority.
Battle:
Medium : recommended, good balance. Requires the human player not to use full stacks, not to retrain, and to use no more than 1/4 elites per army.
Hard: +4 Morale, +4Attack and/or Defence, can't remember exactly. Ruins the balance work of the EB team. But you can use fullstacks, elites,... a bit unrealistic, but many people like it.
Very Hard: +7 bonusses! Prepare to see your elites slaughtered by Akontistai in melee. You need to constantly take advantage of AI's stupidity and blitz before faction start to throw elites at you.
I prefer M/M or H/M (I'm a slow expander).
VH/M or H/H for a challenge.
VH/H or VH/VH if you want to blitz.
Disclaimer : AI is't any less braindead on VH than it is on E. So don't expect any improvement there.
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