FE is a great game, but its AI is horrible.  I don't expect genius AI, but currently the AI's shortcomings include (from playing at least a dozen games, 2/3 on expert and 1/3 on ridiculous, well over 200 turns each game):

-declare war on me without having an attack stack anywhere near me in 11 of 12 games

-declare war on me and never sending an attack stack in 11 of 12 games

-declare war on me and not have defenders in their nearby cities in >9 of 10 cities

-not attempt to retake their cities deep into their empire (not once)

-not casting strategic spells on me such as tremor or freeze to slow my units in their territory

-once in all my games I had a strategic spell cast on me -- the winter spell.  I dispelled it immediately, it was never repeated

-I see several 'armies' of 1 archer and 1 melee only, within a few squares of each other, never attempt to combine (when the AI could field armies of at least 7 units) when they easily could/should

-the one game I saw AI send a few armies at me, one of the AIs had 4 decent sized armies stacked on each other, and as the stack-of-armies approached it split up allowing me to take it out piecemeal with my one defending army

-units sometimes stop moving (forgotten?  pathfinding fails so they don't move?) for 5-10 turns, then resume movement.  One time a unit didn't move for >100 turns (and it wasn't a 'ghost' unit)

Expecting the AI to have a waiting offensive army before initiating a war ain't rocket science, nor is having the AI put a few defenders in their adjacent cities, nor is expecting AI armies to somewhat coordinate or combine when near each other.

I don't expect the AI to rival a human, but we're nowhere at that stage now.  Yes, the AI is better than back in the WoM days (I'm not seeing 'armies' of only pioneers attacking me anymore), but I've seen the bragging posts about how the AI will make us cry, and so far the only 'crying' I'm doing is with disappointment.

If we had MP then the disappointing AI wouldn't be so bad, but...

The rest of the game is great -- I'd give it a 90+ metacritic score.  Great graphics (very very good, makes the game fun), balance is good and getting better each patch, game is stable (2 CTD since release, I can easily live with that), moddability is very nice (been using Heavenfall's mod and Ecomental) and keeping me interested despite the AI, etc.

AI is the limiting factor now, but a long shot.  Were I king of the FE forest I'd be hiring a dedicated full time AI programmer and making that my #1 thru #10 priority.

Here's a problem that is common to both GalCiv and Fallen Enchantress.  When you build up a superior (or even just a sufficient) military force, the AI stops trying to kick your head in and leaves you alone.

This is a mistake.

When you have superior strength, the AI should be scheming ways to pull the carpet out from under you despite that military strength.  You can't be everywhere at once, after all.  If the AI just leaves you to keep building up your force, it's going to suffer horrendous losses if and when you do launch an attack.

No more brownie points in diplomacy for having a better military.  That's not to say that the AI shouldn't take your military into consideration, but it should be guarded about dealing with someone who could very well be invading next turn.

I also think that hostility should be based not just on whether you have a military, but where it's positioned.  If you have lots of forces stationed in and around a staging point near another civ's territory, then it should cause distrust and hostility.  But more than that, what you do when you're challenged about this military build up should also shape relations.  If you say honestly that you're expecting an attack from another civ entirely and that attack actually happens, it should go some way to justifying your claim that you need those units there.

Actually having the AI engage with the player, perhaps even using the map to highlight grievances and negotiate, there is less of an incentive for the player to casually build up units any old place and more diplomatic finesse needed to smooth over ruffled feathers.

While I agree with some of the criticisms here, it does seem that I'm playing a different game than many of you.  I've only played one full campaign and one half campaign (both on Normal) but I've seen the AI do many of the things you guys say you aren't seeing.  

In both my games, the AI declared war and immediately (i.e., the next turn) attacked me.  in my most recent game, the AI simultaneously attacked two cities on opposite ends of my realm.  One enemy stack set up the attack by taking several turns to march the length of my territory to get into position for the attack.  I was impressed.

In both my games, the AI attacked with full stacks, sometimes multiple full stacks.  It sent three waves against my capital in my latest game.

Only time I've seen an undefended city is a small city remote to the front lines.  Big cities have always had big garrisons, and I've lost 2-3 sieges.   

When I captured my enemy's biggest city in my last game, the AI immediately bombed it with the spell that increases unrest.  Pretty good move, I thought.

Yes, the AI could be better (what AI couldn't?), but I haven't found it be as bad as some suggest.

Until devs ditch the failed concept of having the AI play the same game as the human player (it can't), I don't think this problem is ever going to be fully solved.

AI can be written to perform fairly well in restricted environments (ie, tactical combat), but it's never going to be as good as a proficient human player on a strategic level.

It's even worse when the AI is expected to perform some sort of 'diplomacy', which also never works well, and is almost always hilariously open to player exploitation (or requires bandaids in the form of no tech trading et. al. to prevent weird problems).

I want to see a TBS dev tackle the entire construct of the game from the "AI"'s side of the fence by creating a challenging game world, and filling it with challenges for the player to overcome on the way to victory or defeat, instead of trying (and failing, over and over and over again) to create an AI that can play the same (ridiculously complicated freeform) strategic layer gameplay that the human can.

The players are somewhat guilty about causing part of this problem also - they will scream bloody murder if the AI 'cheats', and yet the player is possessed of innumerable advantages that the AI can never have, until we have some sort of revolutionary AI breakthrough.

The whole idea of having a level playing field with the AI needs to be tossed, because the playing field is not level, and I think it would be a lot more fun to play against a challenging strategy game than a challenging strategy game AI. Subtle difference perhaps, but an important one.

I think its a minor miracle that any of these absurdly complicated strategy games have AI that even approximates a human player, much less actually play the game well or present any meaningful challenge for a remotely experienced player. Insane variety of units (and god forbid, custom units, as is the case here), spells, equipment, heroes, buildings, terrain, etcetcetc, all add up to ridiculous numbers of options that must be coded around.

That isn't to say that these games aren't fun because of bad AI, more that they're typically fun in spite of said AI. The rest of the game can still be enjoyable for other reasons - art, music, story, exploration, building, powering up your empire/hero and conquering stuff, etc. etc.

Anyway. That's a whole rework of the game structure from the ground up, not something that is going to happen here. For my part, I've dropped the game and moved on to others for now. I hadn't touched it since beta early this year, and I was able to step all over it in my first game with the retail version. I didn't see the complete complacency issues reported here, it definitely had meaningful armies, both in its cities and on its heroes, but with the typical abuse of issues I had with the game in beta (hello teleportation), it was pretty easy to win.

There are some cool concepts in the game for sure, but I've found some other TBS games to scratch that itch that are either more challenging (Eador) or engaging (King's Bounty/Warlock's Armageddon expansion).

Medium, Bay of Capacea map.

No.  Though in both my campaigns the wars occurred fairly early, before either of us had many advanced spells.

No, but again I haven't yet had any late-game wars.  

Yes.  The AI attacked my capital with three full-strength stacks, all on the same turn.  The stacks were fairly balanced, with a mix of ranged, melee and mounted units.

The challenge feels comparable to other similar games, at least at normal difficulty.  I ultimately won easily after I defeated the AI's initial onslaught.  But I did feel reasonably pressed at the beginning of the war.  The AI captured and razed my strongest economic city, for example (the one they marched the length of my territory to target before declaring war).

I did.  Their research levels were in the low hundreds across the board.  Their research was well ahead of mine, but not unreasonably so.  There was no bug that I could see.      

It might also be that a larger map like what I play on puts an AI closer to another AI than me, so they attack each other instead of me (in games where I was never attacker even tho declared on, I could see the AIs occasionally taking another's cities, so they were attacking, just not me).

Other problems don't seem to be affected by map size tho, such as the AI not having decent defensive troops in their cities while they have stacks outside cities wandering around, or not trying to retake undefended cities deep into their empire, or not using mid-level spells like tremor/freeze to slow player attacking armies.

Some minor changes could make a big difference:

-AI seems to dec on the weak and peace the strong, that makes sense from one perspective but is backwards from another.  Instead of dog-piling a player when weak, let them build up a bit then dogpile?

-adaptive 'cheating' -- add multipliers to AI strength/resources/build rates/etc. that increase as the players strength/rank increases (been done before with FFH mod for Civ4).

-give AI more garrison troops (adaptive to player's strength), and a pool of adaptive, inexhaustable, mana for strategic spells?

-?

@Mr Zepplin -- thanks for the responses to my questions, and for another point of view from your games.  We all have the same goal here -- a more challenging, balanced game.  Polite and well-reasoned discussion is helpful 

Wait a second. So you are complainig that the AI didn't play as well on your modded game? How is that a remotely fair criticism?

My god, have any of you ever played the Fall from heaven mod? It's amazingly good but the AI is positively weak compared to the base Civilization IV AI.

I dont like when the computer cheats. I want a game where it does play on a leaving playing field with me. If I play monopoly with someone who isnt as good as me I dont give them free shit to make up for them not being good. Telling me that the design of the game needs to change and that i'm wrong for wanting a leave playing field wrecks of not knowing your customer base. That or i'm a minority opinion and just dont know it yet.

 What I mean by this is that i hate unfair advantages. I dont like it when the computer earns more than me for no reason, I hate it when they get more defenders than me, fo no reason. I hate it how the AI in FE can conquer my city and destroy it in one turn but I need 5 turns to do it to them. I dislike in other games where the AI exploited Fog of War and moved its armies to always avoid mine and always to hit where I wasnt. Its challenging when the AI cheats, but its not fun.

 Small tweaks and perks to give the AI an edge might be in order and there ok, but it sholdnt be in your face, it shouldnt be so obviouse that you just go "oh my god its bloody cheating!" That said I always support options and if there was a "Let AI cheat slightly, Let AI cheat, Let AI cheat its ass off, Forbid AI cheating." That I could support. 

 As for Diplomacy, I'm not after anything insane. I expect the AI to behave logically. It should like me for when i do things that aid it, such as gifting it items or money, aiding it in war etc. It should dislike me when I harm it, either directly or its allies. Depending on where I rank on the like/hate bar it should react to be with more or less friendship. Then give it more human responses to say based on these things.

Cuz if you are, I'm playing the current version, several games in fact, and undefended cities are common.  It's to the point that it's unusual to see non-militia units in cities once I take a few.

Just because you don't see something...  And your assumptions, you know what they say about assuming, right?

Thanks for your impolite and poorly considered reply tho  lol

Kids these days...

Further, the issues I and others raise exist in vanilla games, so please to explain that as well.

I think that this would also be affected by map size -- defenses are not a static issue, and it's much easier to move defenders into position on a smaller map (or, to launch an counter offensive to draw troops away from your weaker cities).