I've been concerned about this for months. In fact, it caused me to sit out the beta and delay my preorder until last week. And after playing for most of yesterday evening and getting deep into one sandbox game, I realized I was right to be concerned.
The game lacks an epic feel. Most of the game feels like me and a small adventuring party running around conquering other empires. (How 4-6 guys could take over an entire empire is beyond me, but it's pretty routine in Elemental.) The armies are simply too small to give the game much of a grand strategy feel. I know the culprit: tactical battles. But I don't know why the presentation has to emphasize the idea that I have a few soldiers, fewer adventurers, and a couple of hundred peasants in my "grand fantasy empire."
An infamous early screenshot showed a dragon dealing with what looks like hundreds of armored soldiers. I have seen nothing like that in Elemental (but I knew not to really). Battles are between a few units on each side. In the early game, it's my channeler casting chain lightning and killing 4 spiders (or whatever) over and over. The few troops walking around with her feel like bodyguards or traveling companions, not an army.
The game never feels like I'm ruling an empire. There aren't enough cities. It feels like a small band of people gathering together for protection; a scenario not unlike the classic "DnD party finds a refugee camp and does quests to help" adventure.
I'm not sure how to fix this. You could change the graphical presentation to make soldiers look more like units than individuals (something that sort of happens later in the game, which only emphasizes the small scale of the early game). It could be more clear than 1 pop unit in a city isn't just 1 person. Heroes could be scaled back to where they aren't slaughtering what might be considered a squad or regiment of troops.
This is my major disappointment with Elemental. I just don't feel like I'm playing a grand strategy game. I feel more like I'm coordinating a couple of small adventuring groups around a tiny country with a few villages here and there where I can recruit other party members.
It really eliminates immersion.