The +4 and +7 modifiers are for the battle difficulty.

The campaign difficulty basically gives the AI more. I think VH campaigns gives the AI 10000 gold per turn, so they can often repeatedly throw full stacks at you.

Personally, I like medium battles - I like historical unit match-ups - but go for the VH campaign to have a bigger challenge. I don't like outnumbering the AI - it's just not fair on the poor thing.