If your spy is a general, he can capture a fort and possibly bring enemy troops over to your side as well. If your spy-general becomes a king, he will turn over the enemy's kingdom to you. Spying countermeasures help you defend against these tactics themselves. Each race has three separate units to control. A peasant, a soldier and a special unit.
Spies can come in all three varieties.
Peasants build things and defend their unguarded towns against attack. There is no limit to the number of units you can have, just make sure they are fed and happy. The Fryhtan units are more varied. Each species has a different kind of monstrous creature, each has it's own style and unique animations. Fryhtans only have one unit per species, but these have character.