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There are a lot of obscure mechanics in Warband that a very large fraction of the playerbase is unaware of. Even veterans of this game do not necessarily know how everything works. This guide attempts to bring some of these obscure mechanics to light. I haven't proofread anything yet, but hopefully you can learn something.

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Introduction

Even after 1000 hours, I am still learning new things about this game. Is that a good thing? If you asked me, probably not. There are so many obscure mechanics -- some of which are extremely important, mind you -- that the game doesn't explain clearly, and so a huge portion of the playerbase may not even know about most of these things. Because of this, I figured I should write a guide that explains them.
Difficulty Settings - Campaign AI and Combat AI
All of the difficulty settings are pretty self-explanatory, save for the AI settings.
Campaign AI affects many things:
In format:
Poor / Average / Good (i.e the values on respective difficulties would be 6/4/2)
Economy:
Player tax inefficiency becomes more severe as campaign AI difficulty increases. The player can hold 6/4/2 'core' fiefs, i.e fiefs that do not suffer from tax inefficiency. Each 'non-core' fief increases tax inefficiency by 3%/4%/5%.
Lord Armies:
Overall, on good campaign AI, and to some extent average, enemy kingdoms will be significantly more powerful and it becomes essential to take lords prisoner.
Campaign AI mainly determines how fast an AI Lord can recruit troops. In code, this is technically done by determining the cost of recruitment. On Good Campaign AI, a lord will be able to completely recover from defeat after just a week or so. Whereas on poor campaign AI, you can easily get away with never taking a single lord prisoner throughout your entire game, on good campaign AI, I would recommend that you take enemy lords prisoner -- even upstanding and good-natured ones -- to prevent a constant stream of enemies.
Campaign AI also determines a Lord's wealth (I think? Or it might just be a side effect of drastically lower recruitment costs) and their army's XP rate -- both of these primarily determine their army's troop quality.
It is a common myth that max AI lord party size is determined by campaign AI difficulty. In fact, it is determined by the 'ideal party size' variable, which is determined by the player's level. In other words, max AI lord party size is the same across all difficulties and scales with the player's level. Practically speaking, though, Lord armies will generally tend to be bigger on good campaign AI because Lords can reach their max party sizes faster because of their outrageously buffed recruitment speed. Additionally, these death stacks will have far more room to upgrade their troops.
Behavior:
Campaign AI determines how biased lords are against the player in several ways. On Good campaign AI, lords will be less willing to follow a player marshal, less likely to join the player's kingdom, more likely to declare war on a player kingdom, and (I think) more likely to attack the player's fiefs.
TL;DR, don't play on Good Campaign AI unless you want a challenge, because the AI cheats a lot. On good campaign AI, a lord will essentially be able to spawn an army out of thin air, and in the late game, it wouldn't be unusual to see Harlaus walking around with nearly 100 men-at-arms.
Combat AI
But what does combat AI do? It turns out that combat AI is a lot more simple to explain and a lot less cheaty than campaign AI.
On poor combat AI, the AI is stupid. They will delay their swings, giving you an opening to attack them. They will not feint and they are generally poor at blocking. Their sole tactic on the battlefield is bum rushing into your shield wall. I would not recommend playing on this difficulty. I played on poor combat AI for my first 800 hours, and it resulted in some very bad habits which I'm still trying to break. You will not get that much better at combat playing on this setting since everyone, even elite troops, are pretty much punching bags. This is probably the most noob setting to turn down, even worse than the damage settings IMO.
Average combat AI is a balance, I'd recommend it for new players.
On good combat AI, the AI will have no delay on their swings, will feint extremely frequently (several times before an attack), and is very good at blocking. This allows them to operate to the full extent of their stats, and everyone will fight as if their lives depended on it. It will be a challenge to take down even a single elite troop if your weapon proficiency is not good.

AI Behavior

How do lords interact with the player?
Lords have personalities. These personalities are: Upstanding, Good-natured, Martial, Calculating, Pitiless, Quarrelsome, and Debauched.
The better their personality, the more loyal they are as vassals, but the harder it is to convince them to join your kingdom. Ideally, you want all of your vassals to be either Upstanding, Good-natured, or Martial.
Their choice of dialogue depends on their personality, so once you memorize the different dialogue it becomes easy to know their personality.
Interestingly, AI Kings will not allow you to become their vassals under normal conditions if you have high right-to-rule -- they consider you a potential rival/threat to their realm's stability. You can still become their vassal if you take land first before asking.
AI Lords that dislike you will do everything in their power to attack your villages. The only exception is the Good-natured lord, which will never loot any village, ever, including villages owned by other AI lords.
If a sadistic (evil/debauched) lord dislikes you (-20 relations or less), they will hire assassins that attack you in taverns. They function exactly like a Belligerent Drunk does except they attack you without notice and you do not have to look at them for them to attack you.
Which skills can AI Lords use?
If you plan on making a companion into a lord (which you can do if you ask them 'Would you be interested in holding a fief?' when you have your own kingdom set up), you might want to invest into these for them. I highly recommend checking the wiki first, however, because companions have personalities as well. And you will lose a chunk of relations with every lord in the game if you make a commoner companion into a noble.
AI Lords use 4 skills:

• Pathfinding
• Trainer
• Tactics (helps them in autoresolve)
• Leadership

How are autocalc battles, both between you and an AI and AIs versus other AIs, calculated?

1. Numbers.
2. The levels of their troops.
3. Level of the Tactics skill.

Equipment and so on has no role in autocalc. From what I understand, all that matters are those three.
Do AI Lords have wealth?
The answer is yes. They use their wealth for recruitment (and possibly upgrading). Unlike the player, they have to manually collect money from their fiefs. This is why you'll see them sitting outside of their villages. It's also why AI Lords become poor if they have too many fiefs -- because they don't have the time to travel around the map to collect taxes. For this reason it is best to arrange your vassals in a way where they only have a few fiefs and they are all right next to each other.
An AI lord's village will lose wealth if you loot it, preventing them from collecting taxes. But that barely does anything compared to just defeating them in battle and forcing them to rebuild their army. A fief's wealth cannot go below 0.
The AI lord's economy functions completely differently from the player's economy. AI lords cannot have enterprises. As far as I know, their only source of income is their fiefs (They may, but I am not certain if this is true, get some money from looting villages).
AI Lords lose wealth by recruiting troops, and possibly from upgrading them.
Do Lords have to pay upkeep?
The answer is yes. Lords pay wages to troops based on this formula: ((Troop_level^2)+50)/30. They do not have to pay extra money for cavalry or archers. If they cannot afford their troops, their troops will either get disbanded by the lord or desert from the lord's party.
Which troops desert from a lord's party is random. The lords disband low-level troops and non-faction troops first.
You may have noticed the small parties of fiefless lords. They aren't making money, so how can they have armies? The answer is that Lords don't only have a maximum party size, they also have a minimum party size. If they are below this, they will gradually get troops via free recruitment while sitting in a walled fief until they have a few dozen troops, say 30-50 or so. However, because they have no money, they will not be able to upgrade their troops or recruit any more above that minimum. And when they do get money, they will have to pay for all of their troops' wages, including the ones they got for free.
Hypothetically, an AI lord's army can be of an infinite size, because they can go over their max/ideal party size by rescuing prisoners. However they will eventually start struggling with desertion or they will have to disband the prisoners.
As far as I know, AI lords do not have any system of debt. Their fiefs definitely don't.
What is certain, though, is that Lords have to pay for recruitment above the minimum party size. How much this costs depends on Campaign AI difficulty. This is why on Good Campaign AI, a Lord can spawn an army out of thin air.
If all your lord has is castles then he won't have any wealth to build up his army since the wealth of castles goes towards maintaining their garrisons. Villages might not be good for the player but they are really good for the AI. A good setup for an average Lord is 1 castle and 1 village. Castles mainly help them raise their maximum party size, +40 each, rather than providing wealth. It should also be noted that a castle's wealth is based on its village's wealth -- this also applies for when the player owns the castle.
The interesting thing is that AI Lords do not pay for their garrisons. Instead, an AI Lord's fief's strength is determined by the fief's Prosperity. Coupled with the fact that AI Lords do not suffer from tax inefficiency, a lord could theoretically have every fief in the game and each garrison would be fully stocked. Actions that lower the Prosperity of a town, such as destroying caravans, will, in the long-term, result in a weaker garrison, but this is not practical knowledge to the player. It does generally mean, however, that places that are bandit-infested, have been sieged countless times, and so on should have weaker garrisons, at least if the town's situation remains consistent throughout the entire game.
Do Lord armies use food and morale?
No, they don't use either.
How do AI Lords manage their armies and garrisons?
As stated before, AI Lords do not pay to reinforce their garrisons.
AI lords' troops need XP to be upgraded. An AI lord will add 30% of (Trainer+2)*500 xp/every 2 days. Lords have trainer skill between 2-7, on average this is around 3 or 4. So the average lord adds ~375-450 xp per day. Each point of trainer is worth 75 xp/day. This is rather meager -- a Player Character with 10 in trainer adds 80 xp to each unit. I don't know for certain if it costs an AI lord money to upgrade a troop, but I highly suspect and assume that it does.
How is a Lord's troop quality determined?
The short answer is that an AI Lord's number of elite troops depends on his wealth (an AI Lord requires wealth to upgrade). Again, because higher Campaign AI will reduce recruitment cost, Lords will have more money as a side effect (saving money is gaining money in this case) and they will have more money to upgrade troops with.

Skills, Stats, and Proficiencies

Without tweaks or cheats, the attribute cap is 63, the skill cap is 10, and the proficiency cap is 699.
I'll get right to the most important tip: the +4 bonus player gets for leveling party skills doesn't require a companion to have the skill!
If you have 10 pathfinding, you will get the 10(+4) even if not a single companion in your party has a point of pathfinding. You can test this by starting a new game, importing a character with 10 in every skill. You will notice that you have +4 in every party skill despite no companions being in your party. This means that if you are playing a brainy character, you will only need a couple of INT companions so that you can get them to 10 in the party skills that you don't plan on leveling.
If you need advice on leveling companions, I would suggest two things: Bandit camp quests and hunting down bandits with just your companions in your party.
Approximately 1/5th of strength is added to your damage output. This means that every 5 points of strength will increase your damage by about 1.
Every point of agility gives you an increase in movement speed approximately equal to 1/4 or 1/5ths of a point of athletics.
Every point of agility gives you 0.5%+ attack speed.

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Persuasion increases the chance of routed enemies surrendering, meaning they become prisoners in your party without you having to fight them.
Every 100 points of proficiency increases attack speed by about 15%. Additionally, with melee weapons, every 100 points of proficiency increases damage by 5%.

Controls

Campaign Map
Hold down CTRL+SPACE while moving on the campaign map to speed up game time.
CTRL+Left click on items to buy and sell quickly at merchants.
Battles
If you attack in the direction you're being attacked right as soon as you're about to get hit, you'll parry the strike. This is known as the 'chamber block'.
Press E to kick. Pretty useless, usually.
Pressing Backspace in a battle will give you a minimap and allow you to control your troops by clicking on the minimap.
You can also hold down F1 in a battle and you'll be able to drag around a rallying point, which allows you to control your troops. You can make separate rallying points for each group.
Certain weapons, especially throwing weapons, have multiple attack types/styles. X swaps between them. Try it with a throwing axe or jarid.

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Tips and Tricks

Keeping horses in your inventory will reduce the party speed penalty for carrying heavy things. However, if you carry too many, it will just slow you down and take up needed inventory space. I personally prefer 3 horses.
If someone in your party has high First Aid, you can heal lame horses by keeping them in your inventory. This is important because there is a chance of your horse dying if it gets downed in combat while lame. Unfortunately, you will not recover positive modifiers (such as Spirited) after healing your horse.
Similarly, your shield can get damaged if it breaks too many times. I believe that it can break completely as well if it keeps breaking after getting damaged. Unlike horses, you cannot repair/heal shields.
The recruitment option for a village is reset by a relations change. What you can do is recruit, then take a quest and recruit again, then fail the quest and recruit again, then take another quest and recruit again, then fail that quest and recruit again... You can easily get 50+ recruits from a single village this way. Most of your companions will complain about failing a quest, but unless they are already extremely unhappy, they won't leave.
Additionally, if a village has low prosperity, you can ask the villagers 'How is life here?' and one might ask you for a donation of 300 denars in exchange for 1 relation point with the village. While this does not appear to be a meaningful amount, as I discussed above, a relation change with a village allows you to recruit from them again.
If you have high relations with a village, there is a chance of you getting higher tier troops from recruitment with them. If you are really lucky, you could even end up recruiting elite troops, like huscarls from a Nord village, without having to train them. I have heard of two stories of getting 50+ Huscarls from a village, and one story of someone getting dozens of Swadian knights from a village.

Brief Overview of Warband's Meta

There are two mainstream metas for character and companion combos:
For combat characters supported by INT companions, you generally want to build your character as a heavily armored horse archer with a melee weapon as a side weapon. So you could go Bow+Arrows+Arrows+2H sword, or Bow+Arrows+Sword+Shield. Horse archer builds excel in prolonged battles, and theoretically, as a player, you could solo an entire army by yourself if you had enough arrows with you. I do not recommend getting 10 horse archery, most pros I've seen suggest 4-6 as the ideal amount of horse archery.
For commander characters supported mostly by combat companions, you want to prioritize three skills, the 'Trinity' of skills: Surgery, Pathfinding, and Trainer.
For commander INT characters I would still put a few points into trainer on each of your companions. And your couple of INT companions should have 10 trainer for sure.
If you go INT, you'll want to be using a crossbow. You should also give your INT companions crossbows.
CHA is probably the worst stat for the player character to focus on. A CHA build is useful for newer players, since 10 Leadership allows your armies to be larger and require less weekly upkeep. But an experienced player will have no issues with party size or money. I would consider a CHA build a 'training wheels' build.
All skills in Warband are useful to some extent, but not all are equally useful for the Player. The 'non-meta' skills are Power Throw, Tracking, Persuasion, First Aid, and Trade.
For Tracking, just have a companion with a few points in it.
For Persuasion, it helps you marry earlier, helps you hire mercenaries cheaper, and helps you convince lords to defect to your kingdom. It also allows you to convince routed enemies to become your prisoners. The only one that really matters from a meta perspective is the defection.
For Trade, it really helps to have a trading companion but the player should absolutely never invest into Trade unless you plan on RP'ing.
For armies, the meta is pretty simple.
In the field, Swadian Knights > everything. Heavy cavalry dominates the meta, both in Native and nearly every single mod I have played. If you do not like the heavy cavalry meta, I would suggest the Viking Conquest DLC.
As far as sieges go, it's all about those Huscarls and Rhodok Crossbowmen. Swadian knights will work about as well as huscarls, but they are far more expensive.
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