From my experience and what I read on the forums the monster distribution system needs an overhaul badly. Point one and two being the major issue. point three is more of something to do besides kill AI late game for xp, fighting the same army types repeatedly for xp gets boring.
1. Monsters being exteremely high level at start of game preventing or destroying expansion.
2. AI unaffected by monsters aggression and wandering.
3. Lack of monsters late game.
Monster population distribution should be based on the turn/season of the game. This would prevent the umberdroth swarms and dragons and such from being anywhere in the start. It gets really old being unable to expand because you are bordered on two sides by AI and the other two sides have monsters you will never defeat. I say never because by the time your one city is able to build anything capable of killing it you will be so far down the power scale the AI will tromp you first or take all your godl and make you unable to afford the units.
Start of the game should be broken down into easy, normal, tough, hard (being extremely rare.) Like a breakdown of 30% easy (mites, single imps, etc), 50% normal (spiders, imp armies, etc), 15% tough (cave bears) , 5% hard (three ogre group.) Those initial lairs produce nothing but those units until later in the game.
Later in the game like turn 100 (depending on the speed) you start populating newer higher level monsters into unpopulated/uncontrolled areas. Or have those monsters in the special zones start wandeirng out through the world. Have exisiting lairs create more monsters. Maybe even a few rare events of monsters appearing in controlled territory.
Bring back the random type event of players releasing more monsters into the world from EWOM. Late in game there is usually nothing left except to kill AI players and that kinda makes it hard to get an xp for units created late in the game. Which also bring another point of the huge unguarded areas of empires because you choke the AI players from entering your continental area, so your cities are empty of units.
Have any tiles not covered by a city influence or warden influence be eiligible as uncontrolled when it comes to new monster generation. This would put more purpose into making warden outpost or destroying them. This would be a semi-decent solution to outpost spam because players spamming outposts are most likely not taking time to upgrade.
The wandering monsters are kind of out of hand. Far too many times I can see a tough monsters and ignore it. Then ten to fifteen turns later it starts wandering off from its lair. First off the monster should never leave its lair unguarded. It should wait until a second unit is created by its lair then wander off. Too many times it becomes too easy to aquire high end equipment because you play dance around the tiles with the tough spawns until you get into the lair.
Then on the other hand you have the annoying wanderers that wander five to six tiles just to destroy resources. Warden outposts was supposed to be a solution for that, but they do not work.
The monsters ignoring the AI is something everyone is sick of seeing. Monsters do not attack the AI players. Then depending on what the army stack is the AI will either attack the monsters or ignore it, sometimes even stack in same tile with it. AI and monsters should NEVER stack in the same tile. Then monsters should have an aggression any players weak units, resources, and outposts. Attacking cities should be a very rare occurence unless it was something like an army of multiple units or a dragon caliber type unit. Having one cave bear wipe out three militia units (becuase of its oveprowered maul) and the city destroyed seems more on the lame and far fetched side.