false positives are not that rare, raise an issue with CA over it. Though it might be a known problem.
First off, there are two difficulty sliders.
You only see one when starting the game, this is the campaign difficulty. This primarily affects campaign AI, Agressiveness, lack of willingness to cooperate, and public order penalties.
It is set at start.
In addition to this, battle difficulty scales with what you set your campaign AI, it gives light bonuses to enemy morale and shit on the battlefield.
A lot of people don't like this, and you can change it once the campaign has started, and playing a very hard campaign with easy battles still gets you the very hard cheevos and shit.
Just to keep in mind.
You'll see hammer and anvil repeated ad nauseum here. This is for sensible reasons. it is the be all-end all for fucking up the AI.
Rather than melee ranged cavalry designations, the primary property of a unit is how it fits into hammer and anvil really.
Missiles weaken the enemy anvil and scare off some hammer units, they also do deny enemy missiles. Artillery does the same but at extended range. The primary strength of artillery is, defending or attacking: If you have an arty advantage the enemy MUST attack you.
Then you have your hammer and your anvil.
Anvil can usually be the cheapest part of your army and hammer is often the most expensive.
Understand that being in combat and charging are very important cornerstones to the gameplay.
If you engage in melee, you are essentially using CC on the enemy unit, which leaves them wide open to be flanked. Charges give (most) units a very significant bonus in combat. With most shock cavalry the bonus is so substantial you want to charge, run out of combat and charge again.
Note that charges do use your targetting, if you issue an attack order on an enemy archer far away, and your unit gets blindsided halfway, your unit did NOT charge into combat.