Difficulty levels - what do they do? what do you recommend?

[Brighdaasa]

my first campaign was the Turks on VH/VH:

Byz declared war on me as soon as i got a border with them, same for Egypt about 20 turns later. They're not throwing stack after stack at me at a rediculous pace. Diplomacy just does seem impossible, my standings with all factions went to abysmal in no time for no apparent reason.

Battles aren't that hard imho, maybe because of the great archer, mounted archer troups i get and the ai's passivity, the byz and the egypts seem happy to let me shower their main body with arrows halving their numbers. The Mongols gave me quite a challenge tho, with 8-10 star generals and 6xp troops, i lost half a stack against a full stack of mongols. It does a good job of keeping my sipahis horse cav busy.
The AI doesn't seem to get any bonuses, their stats and morale seem about equal to my troops, but it had no counter to my cav and horse archers going round their back (or didn't care to do anything about it) which always leads to utter destruction of their armies. Even the Byz who have great HA's themselves to counter mine.

I started another campaign with the French after getting a good pounding from a few stacks of Mongols, and becuase i needed a change of scenery.

I chose H/VH this time, diplomacy is much better now, i'm securing trading rights and alliances regularly. And about 35 turns in the game only the Milanese declared war on me, it's more relaxed this way imho, it's not just me against the world anymore.

Edit: i haven't tried lower battle difficulties, so i can't compare, but so far the ai is no match for me and i don't consider myself a tactical genius, i lost the majorty of the mp battles i played in MTW:VI