In reply to your first question, I don't know.

But I will speculate a little bit. I doubt that the tactics of your opponent really get better. I also doubt that the tactics of AI generals will get better, even when they have more stars. It's enough of a monster trying to create one good battle AI (or maybe variations for each faction) without imagining how to create different AIs for different quality generals. I guess it might be possible, but seems incredibly difficult.

What seems more likely to me would be that your enemy general would be more experienced (resulting in higher morale), and/or your opponent's units would be more experienced, higher morale, better weapons, better armor, or more soldiers per unit.

This is in a battle scenario. I've heard that there will also be a separate difficulty setting for the campaign, and have absolutely no idea how that might be achieved.
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Okay, now that I'm thinking about it a little more, maybe they can be better at tactics. My reasoning now: All of what I listed as more likely would only work in a demo or single battle arrangement, not in a campaign setting. But if you can set a campaign to "easy" but with all battles being "hard", I have no idea how the battle could be made hard other than by having a better AI. Hmm. Sorry, I don't seem to have helped at all.