In my opinion, the Undead Faction should be structured like this:
Level 1: Skeleton (Melee). Skeleton Warrior, Skeleton Destroyer.
Level 2: Spider, Poison Spider, Dark Spider. (Ranged, when the spider attacks an enemy, it applies "Plague" for 1 turn) (Large creature)
Level 3: Death Knight, Dark Knight, Ashan Knight (Small creature, casts Weakness when attacking an enemy).
Level 4: Ghosts, Spirits, Banshees. (Flying, small creature, applies Weakness on hit).
Level 5: Mummies, High Mummies, Chosen Mummies. (Ranged Caster, can cast Blindness, raise the dead, and Curse).
Level 6: Mother Namtaru, Fate Weaver, Reaper of Fates. (Ranged, shoots a poisonous cloud).
Level 7: Bone Dragons, Black Dragons, Spectral Dragons. (Flying, large creature).
Added 2 minutes ago
Each unit should have a reason for its existence. For example, Skull Monsters are the result of a deal with a dark spirit of creation - the Lord of Flesh.
Added 8 minutes ago
Resurrecting soulless skeletons and zombies is not the way of the Elves. They don't need armies - Rangers can handle maintaining the borders. The goal of the Faction is not expansion, but the search for eternal life. Binding the soul to the body is one way to achieve this, hence the unit - a human corpse with a bound soul, which is a Ghoul. But the Elves can quite easily use their magic to modify the corpse to suit specific needs or standards, hence the various grotesque monsters, and no boring skeletons.
Added 27 minutes ago
In principle, I'm not against other units, but they should be based on something.
Added 9 minutes ago
For example, Necromancy in Might and Magic VI is based on ancient spells, meaning the Undead immediately gained access to everything - ghosts, zombies, skeletons, there are even ritual undead (ghouls) and undead that appeared based on political connections (Lamasu). I like this approach.