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I've unlocked Challenge mode by beating the champion in Black 2. If I unlock it for a friend what changes exactly? Bulbapedia wasn't very specific, just mentioning that the AI becomes more challenging, higher level Pokemon, and more held items.

  • Are the changes universal or limited to mostly important NPCs (gym leaders, Team Plasma leaders etc)?
  • How does the AI improve? Does it swap Pokemon more often or is it mostly better move choices?
  • Are all the Pokemon in the game higher level or just the trainers you battle throughout the game?
  • What sort of held items does it unlock for the enemy? Does it increase the chance of wild Pokemon having a held item?
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Here is the best summary that I've found from Serebii:

Challenge Mode is essentially the "Hard" setting of the game. Within the Challenge Mode, the levels of Trainer's Pokémon will be higher, starting at one level higher and reaching 5 levels higher at the end. In addition to that, the AI of the opponents will be higher.

In addition to this, the Gym Leaders and Elite Four will have an extra Pokémon within their squads, and their other Pokémon shall have different movesets and hold items.

Source: Serebii Challenge Mode

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