Very, very brief summary of TBS games:
Generally speaking, you have sources of income, and you have outgoing expenditures. In the Civilization series, MoM, and the Elemental series, you get your income from your cities/settlements. Having highly built-up and developed cities with lots of population gives you great income and the ability to support more and better units, and the research to get even better cities and even better units, faster.
So: Lots of big cities = good.
However, to make game play more interesting, developers put in mechanisms to diminish the power of cities and/or slow your growth. One factor that's constant through all these types of games is enemies will eventually show up on your doorstep. If the AI sees you have lots of very awesome cities, but not a whole lot of units, they'll tend to attack, and make your very awesome cities their very awesome cities. So, you have to spend at least some of the time building units to protect your lands. But if you spend too much time building units, your cities won't become awesome very fast, plus it consumes money and other resources, putting a drain on your economy.
Also, the game 'punishes' you for building many cities. In the Civilization series, this is done by imposing a maintenance cost for every additional city built, and it takes a while for the income of any one city to exceed its maintenance cost. (In Civ III this was extremely high, which killed that game for me. That was scaled back in Civ4, which imho, was the best of the series). In the E:FE there is a value called 'empire prestige' which is evenly split between all your cities. If you have very few cities, each city will have lots of prestige, making them grow fast, and giving you large amounts of research, production and money quickly; if you have lots of cities, you have to depend on local special buildings to make your cities grow.
Finally, you can take cities off of your enemies, and make them your own. This often requires a substantial investment in units early in the game, but can pay off big time in the end.
So, the goal of these games is to balance all of these factors against each other. Decide on a play style (often based on what resources you have nearby), and then work towards that goal. If you want to do the early rush, build few cities, get some military techs early, then build a bunch of the best units you got and steal some cities off an unfortunate neighbour. If you want to try a mid-game war, work on getting some early cities out, build them up, then build the best units you can and (as before) conquer your neighbours. If you want to play the long game, get a ton of cities out, as fast as you can protect 'em, then build, build, build. You'll be weak in the early game but if you survive, by the mid to late game, you'll be the 10 ton gorilla on the map.
One last bit of advice: Always, always, always make sure your economy is running as best as it can. In E:FE that means getting food to support your population (because every citizen gives you a small addition to research, income and production), building the gildar-producing buildings, and the ones that give % bonuses to income, in addition to getting caravans going between cities, since each gives a % income bonus for both origin city and destination city. Because running out of cash to support units, build more buildings, or hire heroes just plain sucks.
Hope that helps.
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