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There are three different difficulty levels (Easy, Medium, Hard). What kinds of penalties/bonuses do they cause? For bonus points, how does the "Aggressive AI" option play into things?

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I don't know all the details yet but this is what I've seen so far.

Easy

  • Less Neutral spawns for some campaign missions (Free Resources, no guardians)
  • Lesser Amount of Neutral spawns than Medium difficulty
  • Timid AI, gathers little resources

Medium

  • Lesser Amount of Neutral spawns than Hard difficulty
  • Slightly Aggressive AI, gathers some resources [but I've noticed that they tend to stay idle or make beelines for your base or hero. I've only observed this but can't draw any concrete conclusions.]

Hard

  • Aggressive AI, actively gathers resources across the map (which, amusingly, causes him to lose some of their units making them weaker in the long run)
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Based on what you can see by going to the custom difficult settings, difficulty level affects four things

  • Starting resources
  • Number of neutral armies
  • Growth rate of neutral armies
  • Aggressiveness of AI

Each of these has 3 levels to it. Easy sets them all at the easiest level, normal at the middle, and hard sets them all at the hardest level. Custom difficulty allows you to combine various levels for each setting (so you could have aggressive AI, but reduce the growth rate of neutral armies).

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Yes.

There seem to be an achievement-related effect. After completing an campaign map, you receive this achievement

  • On Easy - Aspirant
  • On Meduim - Veteran
  • On Hard - ???(unknown by me @ this stage)

I'm playing on medium, and have just completed the first map. Update on this answer to follow. Playing on medium grants both Aspirant and Veteran achievements.

Aspirant Veteran

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3
  • That's a start. Any ideas on the affect they have on gameplay?
    – bwarner
    Oct 13, 2011 at 21:39
  • Not now. I'm working on it though!
    – Stingervz
    Oct 14, 2011 at 5:14
  • This is mentioned on the end of mission score screen "You will get a higher score by playing on a higher difficulty". Aspirant, etc. are score ranks.
    – Raven Dreamer
    Oct 15, 2011 at 15:08

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