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I downloaded this mission yesterday and completed it on Veteran difficulty today. In the first week, using a direct assault strategy and carefully planning each battle, I lost 2/3 of my army but captured all of Dungeon, while simultaneously developing the city because there are many resources there.
In the second week, I captured the entire upper area (where the demonic lands are), and finally returned to the city, and there... a fairy tale, not an army, had gathered.
Then I played through the game in two ways: first, I immediately attacked, and again, I had to carefully plan each move, especially the battle with Myv. The second time, I spent a couple of weeks developing the city, accumulating a huge army, and then attacked again. Myv met me at the very first outpost, but didn't attack; she just intimidated me. I didn't even look at her troops and attacked. I won, although the forces were clearly unequal. As a result, I was left with Cave Lords and Demonesses, who, thanks to a well-developed Jezebeth and luck, destroyed a good half of Myv's army. Then, emboldened by victory, I broke through all the outposts, captured all the resource deposits, but near Sanctuary, Myv crawled out at me, basically with a weak army, except for 10+ Archangels.
Then I decided to hide in Sanctuary. Myv ran to my city, and I thought she was going to capture it, but instead of capturing the Capital, she chased after me (thankfully, I had developed Logistics). And Myv simply stopped near the entrance to Dungeon and waited for me. I lost all my troops, but I won, returned, summoned a squad of Archdemons from the fully developed city, and defeated Myv in her castle.