As mentioned, the threat levels are very much a general guideline. Unfortunately, you just have to play to get a sense of what kinds of armies are and are not real threats to the kinds of armies you're playing with. Each of the units in the game appears to get a threat rating based on some combination of its attack, defense, level, abilities, et cetera, and the threat rating of an army appears to just be the sum of the threat ratings for each unit in that army, which then gets matched to the 'appropriate' threat identifier (Weak, Medium, Strong, Deadly, Epic). I don't think the game accounts for good unit combinations, and some of the units probably don't have an appropriate threat level.
I also would not be surprised if the game over-values multi-figure units relative to single-figure units, since the multi-figure unit at full strength effectively has a higher attack rating even if its per-figure attack is slightly lower than the single-figure unit's attack, but the single-figure unit maintains its damage over the course of the battle whereas the multi-figure unit might not (on the other hand, it could, so coming up with a scaling factor for accounting for the figure count might be problematic).
Then there's also the problem of comparing what the opposing army has to what your army has - large groups of low-attack enemies aren't likely to be a significant threat past the early game, yet they'll maintain the same threat rating all game long (Weak, probably, since it's mostly Darklings/Wildings that I can think of for this type of opposing army). Such opponents are a potentially significant threat when you don't have armor and don't have medium or large armies or a mid-level champion, but rapidly become ignorable with basic armor or mid-size armies or decent heroes. Anything that relies on resistable spells for its threat rating is going to feel weak if your units all have high spell resistance (unless it's something like 'attack for 10,000 damage, half if resisted'), but might be devastating to an army which isn't very resistant, while Banshees rely on a gimmick ability which leaves them either deadly or garbage. For any of this, though, the game would need to be comparing what your army has to what the opposing army has, and I don't think the game does so until you tell it to complete an auto-battle.