Please see here for info on difficulty levels:
http://www.slitherine.com/forum/viewtopic.php?t=25960
http://www.slitherine.com/forum/viewtopic.php?t=27338

They work the same way in mods.

Thanks for the links! I spent a whole evening reading posts looking for this info. It would be nice if the ...

In the basic game, there are 5 levels of difficulty. How dose each level change the game environment?
Prestige?
Experience?
Game length?
Core and Aux slots?
AI ability/skill? For example, when I play Field Marshall, are the AI units advantaged +3 on the attributes?

Can these be accounted for and ...

Every unit in your 'core' force, meaning the units you take with you each scenario in a campaign can get up to 3 hero's (depending on how much kills they have made).
Every hero can give bonusses to some of their abilities, most of the time it's +1 to +3 to attack or defense but also movement, range ...