As they gain experience, units improve these ratings. Leaders also gain experience, and for each one in your army you can customize their skills and ratings with points gained for each level. Skills are extensive, from bonuses to movement rate on certain terrain to the ability to cast spells, heal other units, dispel undead in battle, etc. There are so many skills that you can have all sorts of fun figuring out the best set for each leader. Armies can contain up to eight units of different types that move and fight together.
Cities have various sizes, and can contain from one to four armies depending on size.
Cities also have a population made up of a particular race. If this race is not part of your alliance, the populace will not be happy, and if you do not adequately garrison it, the city may rise in revolt, turning the city over to the independents and creating an independent army there. Each race has it's own set of unique units with their own special abilities and alignment. In any map you may have other races that are allied with you. Provided of course you keep them happy.