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i love balanced armies, for me and the IA
For Example:
-Only Army Caps: You can only recruit 3 Units of Reiksguard per Army.
-Army Caps and Faction Caps: You can recruit only 3 Units of Reiksguard per Army and 6 in Total, for your entire Military
Only Faction Cap: you can only recruit 6 Units of Reiksguard in your entire Military, but, if you Want, you can put all 6 in one Army.
Usually, you can increase Faction caps buy building more of the units Recruitment building (In this case: The Reiksguard Caste)
i preferee Faction Caps, because if my Empire can Support 6 of the Elite Units, i wanna handle them as i want. Generally, it means with Faction Caps, you might have a few very strong Stacks and other weaker Stacks, because stack all elites in one army.
Since almost all t3+ Units have Faction Caps, i usually Level a General up to buffed certain units and then put the units with him (Artillery Army) Will another General is buffed differently with different High Tier units (Elite Cav Army, Elite Inf army etc)
I like that, because each army fights different and is used for different Tasks and enemies.
I used to just play with faction caps, which basically just introduces the Tomb King style unit cap for every faction, because that felt the most reasonable.
It gives your empire's growth purpose, because you keep improving your potential to have many powerful units by building up new settlements.
I eventually upgraded to army caps, because I still wasn't happy with the result though.
You would eventually be able to recruit so many elite units, that the lower tier units basically stop existing. I also don't find it very interesting to fight enemy armies that lack unit variety, since the AI will eventually also just start stacking the same units at some point.
The "normal" units also belong in the game. They should have a place within the armies.
And I want to be rewarded for growing my empire.
Army caps achieve the former, faction caps the latter.
And I couldn't play the game in any other way anymore.
I'm not sure if this answers your question but I play with army and faction caps and the AI armies are all generally well rounded with a mix of unit tiers and types.
Some ai armies will skew towards recruiting units buffed by the lord in charge so for example more chameleon skinks in oxyotls army, grave guard in manfreds, black orcs for grimgor etc. But i'm talking about 5 or so of those troops not a whole stack.
Overall I prefer it and find i'm fighting armies that makes more sense than 12-15 of the same unit. Variety is the spice of life.
I also turn up some settings so there are more armies, faster research, faster growth and have noticed the ai will build more average(10ish) unit armies to hit different parts of your territory encouraging you to do the same. Means I finally have a reason to build smaller response and recon groups instead of just going all in on 20 stack doom squads that just move in a line steamrolling town after town.
Edit: Some factions will tend to have armies that have most of their high tier units in one army and another army with maybe only 2 T4+ but it's not very common and the only reason I mention it is because I recently ran into that with Tomb Kings but I'm thinking that has to do with the way they unlock units. They might have had 1-2 full armies already by the time they unlocked most of their constructs.