Small Kingdoms are Inefective
Hopefully this thread doesn't get lost in all the other posts. A fairly significant balancing issue (IMO) with the game as it stands is that small kingdoms are almost impossible to play as. There are a couple reasons for this, as far as I can tell:
1. Resources in your territory don't always link to your cities. This may or may not be a bug; I'm not really sure if it's intended or not. My impression was that if a resource is in your territory, you can build on it and use it. The building part certainly works. But if you have a level 5 city and a resource that is toward the edge of your area of influence, it will be too far away from your city for you to use it. I noticed this when I researched the "Pariden's Ally" tech that lets you recruit Shrills. The shrill hive appeared close to the edge of my border, I built on it, but I couldn't train and shrills. I clicked on the hive and it said that it wasn't linked to a city, and when I moused over that it said it needed to be 4 tiles (or something like that) closer to my city for me to use it.
If this is a bug, then it will get fixed and problem solved. If it's intentional, it makes having a few high leveled cities spaced far apart pretty much useless, as it occurs with all resources, not just the unit recruitment ones (ie, gold mines, farms, etc). What's the point of expanding my city when I need to spam a bunch of cities to make use of all of my resources?
2. Smaller kingdoms can't compete militarily with the larger ones. Now, this isn't a problem by itself. It makes perfect sense that a larger kingdom can field a larger army. Because of that, you would expect a smaller kingdom to pursue an alternate path to victory, like diplomacy or the master quest or something. What is a problem is how diplomacy works related to army size. If your army isn't close in size to your opponents, you end up with a huge negative to your relations that can't really be undone. As a small kingdom will almost always have a smaller army, you very quickly run out of diplomatic options.
I was playing a game on a large map and got a bad start. I was on a little peninsula, with a decent amout of resources, but I had two opponents blocking my expansion farther inland. So I ended up with two cities, and tried to go the diplomatic route to make allies with at least one of my opponents (expansion over sea was pretty much out of the question for various other reasons). I got a cease-fire with one of them early on when we were close to the same size, but he quickly expanded while I was stuck to my two cities. Soon his army got big, I got a huge negative multiplier, and I couldn't do anything about it. Eventually he hated my guts, but couldn't declare war on me because of the cease-fire. As soon as it expired, though, he declared war.
Now again, a small kingdom shouldn't be able to compete militarily with a large one. But diplomacy should still be an option. The military size penalty shouldn't be so large as to completely prevent diplomacy from ever happening (in the above game my opponent had values of 20000+ for things like trade treaties because that was how much he didn't like me).