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https://www.totalwar.com/blog/ff2-damage-1/
Magic resistance only affect spells. If an attack has fire the fire resistance is added on top of the physical resistance (assuming its not a magic attack in which case only fire resistance is counted).
Basically unless otherwise specified its breaks down to
Is it Melee/Missile/Spell? Melee = no resistance / Missile = add missile resistance
Is it magical? Yes = ignores physical / No = include physical resistance.
Is it Fire damage? Yes = Add fire resistance / No = No fire Resistance
Is it a spell? Yes = Add spell resistance / No = No spell resistance.
Always add ward save.
I also remember there being a hard cap on total resistance. I think it was 80% back in WH2 but Its been awhile since I checked.
All good. Dropping my own 5 cents. The only thing I would sometimes not apply is the flame-attack standard. Some lords/heroes/units have surprisingly a lot of fire resistance. Unless you're slaying Undead or Nurgle, it's usually not a good idea to have it on, if possible, I prefer poison and/or magic attack. Especially magic attack standard can be useful against ethereal or high physical resistance units.
So IMO you should use the banner, just be ready to unassign it if you come up against a stack full of phoenixes or something.
You're not wrong that the other attack types are universally great, though. Flaming is the only one with potential downsides (other than letting ranged units do more friendly fire vs physical-resistant allies, I suppose).
Direct Damage is always Spell damage regardless of its source.
90%, including TWWH2. Might have been increased at some point in TWWH2, but can't confirm.
Magic Resist -> Spell Resist was the most notable change to resistances between TWWH2 and TWWH3, so Magic-imbued basic weapons no longer interact with Magic Resist.