How does custom battle troop choice work?

It seems like all armies can pretty much have whatever units they like, same in quick battle - many of the army choice units can come from very far afield. Can someone please explain whether this was commonplace? Are those units simply there due to where the battle takes place? Could armies recruit from the local area troops?

There is a specific custom battle EDU in the EB folder.
Swap it with the one that is in place in the beginning and you get a very faction related roster :yes:

The "standard" EDU that is in place from the beginning, is the same as in the campaign, so you can recruit all the local troops as well.