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1 vs 1 (you need to set a higher AI level to add some competition and suspense) !!!
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"Win by deafeating all enemies " ? what do you mean enemies (1vs1) , AI player/players or enemy units on map,if your answer is enemy units on map then why does the AI player surrender early (1% of enemy base destroyed) ?
What they mean is you must defeat any enemy opponents, AI or players it doesn’t matter. The AI is just programmed to offer a surrender when they lose a certain amount of Town Centres I think. Not sure of the exact conditions, but you can always reject their offer and eliminate them. Defeat is not the same as eliminate.
The difficulty part is mostly due to the majority of the player base not being able to handle harder dificulties (even with the blessings) so they probably wanted to cater to the majority and keep it from feeling an “impossible challenge” to some. Personally i would love for it to be highest difficulty or at least have a toggle so it feels like an actual challenge and not a stomp with blessings.
On your second point. What you are talking about is the victory condition. Theres supremacy in which you can win by defeating all enemy units, capturing all settlements and holding them for a certain amount of time or the previous “wonder victory” of legacy age of mythology. Conquest means you can only win by defeating all enemi units. Its not making reference to the number of opponents you have. Theres also regicide now, in which you get a hero unit that looses you the game if it dies or defeats your opponent if you get his.
Those victory condicions are “forced” your opponent doesnt get a choice, he looses as soon as they are completed (wiping them out or the timer runnning out). They can however resign earlier willingly if they dont see a way out (when talking about multiplayer) and for AI the have programmed sets that when reached will turn into them resigning (like loosing tc and certain vil % early into the game), thats why in solo play you get asked if you would like them to surrender or if u wanna keep pummeling them to the ground.