How many factions are there?

Yes, 4 is too few; we shouldn't go to extremes! The most popular ones are: Humans, Elves, Dwarves, Mages, Undead, Demons, Orcs... These races seem to be the foundation of the entire fantasy world. Reducing the list would lead to forum threads with suggestions to create new castles, races, etc. Increasing (significantly increasing) the number would lead to all races becoming too similar, which would result in boredom and monotony in the gameplay.