A possibility would be that choosing one elemental for your benefit would cause a weekness in the opposite element.  The weakness might not be as strong as the benefit, but may depend on it.  For example, if your unit's armor gave you a +4 protection from fire attack you would automatically have a -2 protection from water attack.  If you had a +4 fire and +2 wind you would have the -2 water and -1 earth...so you would always have trade offs.

fire/water

wind/earth

life/death

Maybe items produced in a city within the bounds of a fire shard would automatically have a +1 fire attribute on both offense and defense, and the same for other types of shards.  Also, if the Soveriegn's natural affinity was towards fire, that might be an additional +1.  Research might eventually allow the blacksmiths of a Soveriegn to add more +fire to items they made, and then you might have the enchantments you discussed to end up with a very strong fire based unit.  Maybe your kingdom is in the mountains around some volcanos and this has contributed as well.

If you used your fire army against 'normal' plains folks, you would have a significant advantage.  But perhaps you encounter another Soveriegn, water based with cities on islands and armies with water based strengths.  Your war of fire and water would be brutal, both sides weak to the attacks of the other.  I could see the logic for a negotiated peace between you so you don't destroy yourselves...to the delight of other Soveriegns!

We could also consider some magic spells which Soveriegns and Heros could (sometimes) learn, spells like 'reveal magic.'  When cast on your fire based units the caster would become aware of your fire attibutes (which otherwise might be at least partially hidden) so the caster could take counter measures....if they have any resistant or water based units they ought to use them.

There could be spells of 'counter magic' which temporarily reduce elemental benefits, but there can also be 'enhance magic' spells which increase them. 

There also might be environmenal effects.  Fighting near a volcano or in a desert could enhance fire attributes while fighting in a swamp, glacier or rainstorm could reduce them.  This could be tile specific in accordance with the map modding post Frogboy recently put up.  For example, if a river had a waterfall as it descended from the mountains, that tile could always be full of mist thus impacting fire and water magic in it, one positively and one negatively.  Another tile might have hot springs, enhancing water and fire both.  A line of tiles might represent a geological fault line increasing earth magic, a windy canyon does the same for wind magic.  Ancient battlegrounds and graveyards enhance death magic, the Lost Garden Of Eden blesses life magic.  The areas around shards will probably enhance magic of that type. 

Maybe I'll mod a combined Tango Dance Hall and Brothel to enhance Life magic in my cities!

Spits has an interesting point...in addition to a 'crafter' expert Soveriegn, perhaps another route would be a 'summoner' expert Soveriegn.  After learning and developing, this Soveriegn could not only summon pre-designed creatures but eventually (and expensively) learn to create creatures for summoning.  In other words, design the characteristics of summoned creatures rather than use pre-defined ones. 

So if your son was a hero in your employ, you could summon a heretic wolf-hound pet you designed and link him to your son as a bodyguard.  The son would be protected somewhat from assasins and the wolf might poisen any attacker, both in or out of battle.  Let us name the critters, too...that beastly wolf-hound named HellSpawn or Jinglebells.

Huh...and it will stay like this? I mean...resistances/vulnerabilities should be in the game...it's a part of all grand & decent fantasy strategy games afterall.

Well, we also have only seen a limited set of creatures and equipment. For all we know, such bonusses might be granted by equipment for normal (Fallen / Human) units and more special units (Dragons, ...) will have more / other stats.

Well I think the systam at the moment is more flexible than civ 4 for battles, but if it's going to be great it will need a larger set of possibilities. Say primary attributes with lots of derrived attributes to simplify things. (it's not so bad if you have the old strength, constitution and willpower...etc, then have the base/unmodified resistance to everything from willpower, poison resistance/disease/plague/healing all from constitution and attack modifiers from strength.

I don't really mind how it's implimented. I'd like everything to be on it's own, but I think it would make more sense if some attributes were inherently linked from primary attributes. Either way the HP, attack, defence has got to branch out to make magic fun, and fighting in general. I know MoM did alright with it's elegant complexity. But elemental will be so much better if it incorporates everything it can. I would like to see a web of linked traits eventually, high level spells and unique buildings and resources making your army stronger or wiser... changing everything it depends upon. Say if your troops needed a certain level of wisdom/knowledge/power/int to be able to cast spells in battle... well, study death magic, sacrifice everyone, build a tomb of knowledge and cast the spell of mastery and suddenly all your peasants, without training have the ability to fire fireballs and raise the dead. But also suffer from lower constitution and strength... which means corrupting spells would spread disease faster and reduce the maximum populations. So maybe you could have some mastery of death spell, working as a global 10 or 100 point boost to constitution, maybe doubles their health, makes them immune to poison and heal quickly. But maybe it also reduces strength to 1. So an army of mages that get torn to pieces because they can't fight back physically. But if they're evil, undead mages they'd be amazing... if they could be tailored further, specialising more and more each empire would feel amazingly unique.