Hmm...
More likely, it's like that (I mean in Heroes 3).
There's a God of the faction.
There's a PASSIVE bonus that the God of the faction provides. Its effect is increased by the Sanctuary.
Any monster dwelling can be converted into a Sanctuary, but its production rate drops to 0.
You can sacrifice creatures at the Altar of Sacrifice (dedicated to the God of the faction) and receive a temporary (creatures of levels 1-7) or permanent (level 8) bonus.
Bonuses from the Gods of the Factions (increase):
Castle - Defense
Rampart - Ranged Damage
Tower - Knowledge
Inferno - Melee Damage
Necropolis - Necromancy
Dungeon - Magic Power
Fortress - Attack
Swamp - Magic Resistance
Conflux - Magic Damage