Some races may naturally hate others, and start rebellions against their rulers if they are captured. Combat in Age of Wonders is turn-based, which offers plenty of opportunities to include complex strategies in your battles. I enjoy sending grunts to the gates of a city and keeping my higher-level unicorns and giants behind cover. When the enemy sends out his troops beyond the walls, my grunts get slaughtered immediately. But then there's the sweet satisfaction of sending in the more powerful units and annihilating the enemies forces in a single turn.
Players can choose to produce many different fantasy units, spanning many different races.
If the player captures a Goblin town, he can select the town and queue up to five Goblin units to be trained. But say that the player is at war with the Goblins and doesn't want to have the town rebel against him. No problem, just select the migrate option and choose a race that you're allied with. In a few short turns, your units will boot the enemy from their town and take over. The magic system is quite easy to learn.