Find the CoreDifficultyLevels.xml in the Data/English folder in the game directory. It should have these basic tags:
<AIDifficultyLevel InternalName="AIDiffLvl_Challenging">
<DisplayName>Challenging</DisplayName>
<AIEconomicRatio>1.0</AIEconomicRatio>
<AIFOWCheat>0</AIFOWCheat>
<AIHPRatio>1.0</AIHPRatio>
<AIStartingFundsRatio>1.0</AIStartingFundsRatio>
<AISovereignHPRatio>1.0</AISovereignHPRatio>
<AIUsesCombatMagic>1</AIUsesCombatMagic>
<AIIntelligenceFactor>1.25</AIIntelligenceFactor>
</AIDifficultyLevel>
<AIFOWCheat>0</AIFOWCheat> at 0 it does not see through the fog of war. At 1 it does.
You will notice some terrifying expansion and troop movement with this enabled. Not everyone's cup of tea, but the AI is not ready to exist with out IMHO.