well, maybe Katerina isn't the leader of the humans... but I think he meant the Queen of Erathia.

Added 1 minute ago
I think it's not entirely correct to compare the Erathians from Heroes of Might and Magic III with the Knight's City from Heroes of Might and Magic II.

by the way, in Heroes of Might and Magic III, the cities are distributed among the states, unlike in other series 1, 2, and 4 (in Heroes of Might and Magic V, it's also like in Heroes of Might and Magic III).