Tip 2. Spells of your hero.
One of the best initial combat spell - Chain Lightning. Urgently research this spell if it possible. Young hero + 2-3 archers (or darters etc.) + Chain Lightning and victory is yours in any fighting without big losses. Don't forget that you can choose the magic spheres before the game in the "Customize leader" options.

Tip 3. Initial army.
No doubt, you should have some archers. Very good (but slow) fighter is Flame Thrower (you see - 4 Attack, 3 fire damage and good resistance). As for elves, very interesting creature is nymph. She is able to mesmerize some enemy troops in the short range. Put 2-3 nymphs behind your forces, when enemy infantry comes to attack - charm it! Remember, there is resistance for charm for some races. It's very simply to charm orcs, human or goblins. Kobolds, elves (?), hobbits are often resist this ability of nymphs. Nymphs can't charm war machines and undeads.

Tip 4. Towns of enemy races. 
To take the permanent control on the these towns you should have garrison. For small towns 1 unit is enough. As for cities - at the first time you may leave 2 units, but a dozen of days later you should increase garrison up to 4 units. But there is another way - migration to the hostile town. Choose the "migration" button in that towns and point friendly race. Process takes 2-4 days. You should leave the garrison during this time.

Tip 5. Vassal troops.
When you take control on the towns of enemy race, you can produce vassal army. But they will desert 1-3 turns later. To prevent this one, merge the vassal troops to your hero's army. Such hero bonuses like "bard" or "leaderships" are important. On the other hand, vassal troops have a low moral and the bad combat characteristics, so it seems that vassal archers are useful only. But if you have some satyrs in you army you can avoid this problem.

Tip 6. Dead king. 
Units can't make damage this undead without "Enchanted Blades" spell. But, there is a special unit for this case - cleric (priest) and his ability "Turn undead". You will need several clerics to overcome undead. Another way - hero's spells like "Holy …", "Turn undead", "Magic bolt" etc.

Tip 7. Combat.
Pay attention that AI is trying always to attack you (but case of siege). So - prepare your archers, flame thrower, spells and wait enemy in a good place. In this case you have advantage of first shot. But sometimes opponent cavalry can attack your archers without range damages due to great movement range.

Tip 8. Heroes. 
Pack of Heroes is the best army in this game (like in Master of Magic) :). So - train heroes always and everywhere. Training Arena is a very helpful on this way. Divide your heroes by two groups: fighters and long range attackers. Fighters should have a great combat stats+ability of life stealing, first strike, or poison, etc., others are archers and mages. Some heroes should have leadership bonus or Bard skill. Marksmanship II - is important for archer.

Tip 9. Caves, ruins..
On my expirience, caves, abandoned castles, ruins etc. are the only sources for heroes' items. If your hero has sufficient army - there are no problems to liberate items or some confined creatures. If your hero is weak and alone... These ruins/caves are in the dark, items are dumped in some defined places. So you can easely stole it without struggle! Night vision and great movement rate is helpful. Another trick - local archers can't effectively shoot in the dark. So - sneak up, two hits...

Tip 10. Others…
It's very simple to take control over see: build several galleys and SINK THEM ALL! AI have no any idea about convoy protection of transports.

"Call hero" spell. You need it if you gonna have the pack of heroes.

To siege the fortress with wall you need the battering ram or drill war machine.