The first thing to note is that there is TWO difficulty setting. The first, you encounter is the "world" setting, this basically dictates monster behaviors , lair distribution and strength. The second difficult setting, on the opponent's page, dictates the individual AI (or collectively) difficulty, intelligence, and bonuses/penalties.

As to monsters:

From my understanding, monsters tend to ignore capitals (first cities) so that players don't get wiped out. Monsters also look at city defenses to see if they actually have a chance before attacking. So just your typical few millitias will dissuade your average bandit group from trying unless they have a lot of guys. Most of the time, you only have to worry about big monsters running straight for your cities, the random mobs tend to just walk around destroying improvements waiting to be killed.

If you want the monsters to be MORE aggressive, turn up the world difficulty. This makes the monsters stronger, and thus making them more likely to attack. Do realize though, if you're not prepared, the monsters will wreck everything.

There were NO units guarding the town in the example I posted above.  NONE.  I left it undefended on purpose to try to get the AI mobs to attack it.  They refused to, even though they were sitting one square away for 20 turns.  

That is the only time I've had my faction attacked in my game of around 300 seasons.  This is on normal difficulty.  I'm sorry, but under "normal" difficulty, your faction should be attacked more often than that.

Uh....gonna call bullshit on that.  The bandits walked in and the city dissappeared.  No unarmed "default defenders" to be found.

You are playing Fallen Enchantress right?  Not War of Magic?  I know how the game works, I am not bullshiting you.  Every city has default defenders.  Unless you ran into some kind of game bug, there should have been a battle between your city defenders and the bandits.  And I said unarmored, not unarmed.  

I don't think you understand how the game works, you actually have to build a unit to have a defender in a settlement.  There is no "default" defender.  Every settlement starts without a defender.

GaelicVigil, Kalin and Lord Xia are two of the long time players, and you can learn a lot from them. 

Every city is supposed to have defenders that you can only see in action when it's attacked, or you can check out in the detail window, on the left, above the buildings, above the city level.  I'll attach a picture in a few minutes.

If your cities do not have default defenders, and bandits take them without resistance, either:

1. You have found a bug. (There is one which has that effect, when multiple factions attack a city at once)

2. You are playing a mod.

3. You have just conquered the city, and moved your troops out.

No mods, never used one for FE.  I've played many, many games without a default defender in my settlements.  I'm not quite sure what you guys are talking about.  I'll take some screenshots and post them later on of before/after settling.  No defenders.

Do you have the icons I pointed to in my post? Can you post a screenshot of a city's detail screen? Does the enemy have default defenders?  can you give us a save?

I'm amazed that no one else has ever observed this.

You must have some kind of bug or something.  I can't imagine you not noticing cities having defenders if you have played more than a few hours.  It seems impossible to not have noticed, so it must be some kind of rare bug.

I would hope he knows the difference, and even then he should recognise that his first city has defenders.  It crossed my mind though, but it's really hard to believe he would mistake an outpost for a city.

Sounds to me like he thinks "defenders" mean selectable troops you can move out of the city and into the map.  I myself did not know about militia until one of my cities was attacked and found my very inadequate army backed up by just enough militia to make a difference.  I did not know, in fact, that you could view them anyway, so thanks for pointing that out.

So yeah, if you're city was conquered without a fight, that's definitely a bug.

Yeah, no.  Bandits attacked my settlment, I saw the regular combat pop-up.  Pop-up disappeared, and settlement was completely wiped off the map.