It is trivally obvious to anyone with even a moderate understanding of D&D 3.5 or Pathfinder that something is wonky with the combat in this game -- far too often combat devolves into "My fighter with the best equipment that I have can only hit foes on a natural 20 but my foes can hit me on a 5 or better -- this can't be right, and it isn't fun either." And if you look up the modifiers on the to hit rolls and compare it with the Pathfinder stats for the creatures you'll see that yes, many / most creatures have an extra +10 attack bonus and an extra +10 AC versus their standard templates, which is kinda absurd. And this is at the Normal preset difficulty level.

It turns out, however, that this can be fixed (more or less) via setting a custom difficulty level. This guide goes into the details of how this can be done and why it works.

Full disclosure: This isn't my own work -- but it is important enough that I felt that it should be posted somewhere more visible than a reddit thread, so... The source thread is https://www.reddit.com/r/Pathfinder_Kingmaker/comments/9jw7z1/enemy_difficulty_vs_enemy_stat_adjustment/ and if discosoc (or anyone else, really) would prefer that I take this down, leave a comment and I'll do so.

If you have suggestions or additions to this guide, please leave a comment and I'll uipdate the guide if appropiate.

Keep in mind that this guide outlines how to reduce foe statistics to produce an experience that more closely resembles the P&P experince -- that doesn't mean that you are "experiencing the game as the developers intended". I assumes that the "Normal" preset gives the experience that the intended experience (since that is the default), and on this level "Enemy stat adjustments" is set to "Somewhat easier enemies" (vs "Normal" recommended in this guide) and "Enemy Difficulty" is set to "Normal" (instead of "Weak" as recommended in this guide). Your milage may vary!

Read the guide carefully: As stated in the guide, some bonuses are (in effect) applied twice -- once to the key statistic (Strength, for example, impoves Attack Bonus) then again to the derivied stat (Attack Bonus itself). A +2 modifier, then, is equivlent to boosting strength by +6 -- +2 for the direct change to Stength and an extra +4 to produce the +2 increase in BAB. This adds up quickly to produce the absurd numbers reported in various forum (and reviews)!

TLDR: Core Rules Set Enemy Difficulty to "weak" and Enemy Stat Adjustments to "normal" for mostly-accurate Pathfinder experience, in terms of encounter balance.

TLDR: Enemy Stat Adjustment only seems to influence Regeneration and Immunity bypass (no or reduced damage from non-magical weapons), and from what I can find in the code, only when choosing "somewhat easier" (half regen) or "much easier" (no regen) options. Any other option, such as "much tougher enemies" doesn't appear to actually be used anywhere I've found in the code. Comically enough, this even means choosing the "moderately easier" option is exactly the same as "much tougher" when it comes to this (which is all I can see it actually getting called for).

TLDR: Enemy Difficulty changes the modifier scores (but not the base values) of the main attributes, skills, AC, Attacks, and Saves, by -2, +0, +2, +4, for weak, normal, strengthened, insane options accordingly. I'll go into why below, but you might notice attacks and AC get double-dipped due to the way the math is handled. I'm not sure if that's intentional or not, but it results in a rather steep increase in certain key stat values.

Details: Enemy Stat Adjustment

This one is pretty clear from what I've seen. Here's the relevant code snippets pseudocode:
Basically, there are checks to see if "Decline" or ExtraDecline" are set (internal terms for "somewhat easier" and "much easier"), then does a full, half, or no regeneration depending on the configuration. It checks it every round, which means you can change the setting and it will be reflected on the next round of combat.

There is a similar check for Damage Immunity which either removes it entirely or converts it to resistance (half damage).

I think the main takeaway here is that the difficulty label of "Enemy Stat Adjustment" isn't very clear -- and possibly a translation issue more than anything. There's also the likely oversight in not reducing the regen and immunity values for the "moderately easier" option.

Details: Enemy Difficulty

Here's partial code that makes the magic happen:

It looks more complicated that it is, but gist is the math works out so that the weak, normal, strengthened, and insane options grant a -2, 0, +2, +4 bonus to the modifiers of various stats. The important distinction to make here is that the bonus is added to the modifier and not the base score. So if a Troll has a Strength of 26 (+8), bumping the difficulty up one notch would turn it into a 26 (+10). Notice that the actual Strength score doesn't increase; just the modifier.

Anyway, it does that for the six core stats (Str, Dex, Con, Int, Wis, Cha), and then does it again for perception, AC, attack, and saves. The problem here is that the "derivative" stats are double-dipping when the difficulty changes. So a Normal Troll has +8 Strength mod, but a Strengthened Troll will have a +10 and a +2 attack modifier. So end result is a Strengthened Troll effectively has 8 higher strength than normal. If you bump it up to an Insane Troll, it gets a +12 Strength mod and a +4 attack modifier, effectively granting the troll 16 Strength higher than normal.

The exact same thing is happening with AC, because it gets both a Dexterity mod boost and a flat AC boost. Same with saving throws and perception.

I think the question I have now is if they intended the difficulty bonus to double-dip like this or not. The above code uses two distinct variables (value, value2) for the basic and derivative bonuses, yet the values end up the same. I suspect they might have wanted them separate so that the combat log "clearly" shows the attack and AC "difficulty" bonuses listed on their own. I guess I just feel like the effectively +4 bonus to attack and defense per difficulty level ends up rather frustrating.

Lastly, here's some stat information for the Troll in the Old Oak map using different settings.

• Weak Initiative Modifier: +2 (14) BAB: 6 Strength: +6 (22) AC: 16 (10 + Dex +2, Natural +7, Size -1, Difficulty -2)
  
• Normal Initiative Modifier: +4 (18) BAB: 6 Strength: +8 (26) AC: 20 (10 + Dex +4, Natural +7, Size -1)
  
• Strengthened Initiative Modifier: +6 (22) BAB: 6 Strength: +10 (30) AC: 24 (10 + Dex +6, Natural +7, Size -1, Difficulty +2)
  
• Insane Initiative Modifier: +8 (26) BAB: 6 Strength: +12 (34) AC: 28 (10 + Dex +8, Natural +7, Size -1, Difficulty +4)

It's worth pointing out that most everything I've looked at suggests that the "Weak" difficulty option is the one closest to the actual rules -- more or less. For example, here's a basic Pathfinder Troll. 16 AC. Dex mod +2, Strength mod +5, regen of 5, a Rend Attack... It's basically a Man-Eater Troll from the video game. "Normal," however, is a bit tougher.

The issue I've noticed, however, that makes direct comparisons difficult, is that Owlcat seems to have gone a bit overboard on giving a lot of their enemies extra feats. When combined with the game's liberal interpretation of Flanking (just need two people attacking the same target), it's not hard to see how something like a Kobold Sentinel can get +8 to hit without really having beefed up core stats. Setting the difficulty option to "Weak" helps counter those superfluous feats a bit, although it does give you an offensive edge since you still get to take advantage of the easier flanking without a nerf. I think it's an overall fair trade, though, because so many fights involve your party in totally crappy positions anyway.

Food for thought. Hopefully someone finds the info interesting.