Monsters will only venture a certain distance from their lairs, if they are still standing.

(There are apparently other mechanics also involved -- they have their own criteria for their decision making, including some intimidation factors where your cities can scare some of them. But I am not sure if any of those are relevant for dragons.)

My typical experience is that my borders expand and activate the higher level monster that I have been trying to leave alone because he will slaughter me.  The monster wanders around for a good 5 or even 15 turns and then eventually attacks (and insta-razes) my city.  Anyway, they don't attack right away, even the player cities, or at least that is what I have always found on challenging.

A hundred different stories like this appears, usually ending up in the dragon going on a munching rampage on the human player.
(Have been watching during some X beta's ago, so I did read these as they popped up)

I would swear to the fact that the AI have some kind of monster-repellent batspray or something, that said, Frogboy have on several occasions swore several blood oaths and done rituals and stuff with daggers swords and camels to convince us the monster AI is actually rather simple and/or dumb, and that we are just seeing the "freak" accidents that happen upon a random roll of the % generator.

I do hope they end up giving us the means to mod the monster AI, that would be fantastic, at least someone could make a reliable evil faction of monsters that always attacks outposts and units, so we wont see this anymore. (or there is no more excuses to go take a good long look at the monster behaviour and figure whats wrong).

Sincerely
~ Kongdej

Monsters def. attack the AI- the top AI in my current game keeps losing cities, and I'm 90% sure it isn't to any of the other computers.  It's actually kind of annoying, I need there to be at least one strong power out there so I've got someone interesting to fight

The only game I've ever played where it was obvious that the AI suffered from monster attacks was Alpha Centauri. It's kind of funny when you get a death notice 8 turns into the game. I consider "abundant wildlife" to be a balancing factor to higher AI settings. I think in Civ 4 the AI also suffered from barb attacks, but I don't remember any civ actually dying from them.

I haven't noticed, say a bunch of assassin demons wiping out any of my allies cities in FE yet, or even attacking them, but maybe the AI is better at taking out the spawn points. I like to farm them for more exp.

some sort of notification when monsters destroy AI cities would help.  it may just be a perception problem, but since new players still ask this question, more information would help people not get turned off by what they see as unduly unfair.

During the beta, "Tuidjy" did a test and found "evidence" that the monsters act differently when you can see them and when you cannot see them.

Edit: https://forums.elementalgame.com/435073/page/6/#3265361

Edit2: It was not during the beta, but during 1.00, and some of his findings have had change notice in the patch notes.

Sincerely
~ Kongdej

I used a quest scroll during the early game, I think it was around turn 40 or so.  Not sure, it was early though and my sov was only around lvl 8 but I got the quest where the bard sings his song and out pops a dragon.  Because I didn't want to waste my 100gildar (110 gildar since you pay 10 for the song,) I told the bard to sing away and then down swooped the dragon next to my city.  I made sure to garrison up my sov and his little play army, fearing, KNOWING that I was doomed and had just cause my demise.  I hit next turn and waited for the dragon to attack my city.  It did nothing but walk around a little.  I hit next turn.  Dragon walked.  I did this for a good 20 turns, (I really had nothing better to do as I only had 3 cities and was still trying to get my feet under me with my infrastructure.)  The dragon actually ended up eventually walking out of my territory and up to, what I learned was, Roselin's territory.  I never saw him again until my army was EPIC and I was traveling wherever I wanted.  He was still in Roselin's territory just hanging out. 

I will agree that the AI is broken for monsters attacking cities and outposts.  Also, I should note I was playing on Challenging/Challenging.

Monsters will attack the AI,  Not so much with cities or outposts but they will attack units. 

I used that to my advantage in todays game.

On Challenging setting (both AI and overall level)  Yithril managed to build a subtantial lead over me (way better starting position) and the Declared war.  They only had one path of attack and I managed to capture one of thier outposts as early warning and prepared to switch to unit building to defend.

Then I had an idea... there was a deadly Drake pack that had been disturbed/activated just to the south just outside the outpost Area of Control. I rushed a Warden upgrade (I think thats what its' called,, that or constable...I can't remember but its the one that repels monsters)  and then kept a horse unit nearby to keep an eye on things.

worked like a charm...

I saw at least 8 medium to strong Yithril Units attempt to traverse the region, each time the Drake Monster stack made a beeline to the Yithril unit wiping it outit. Basicly it was an impenetrable defense for a good mid portion of the game allowing me to continue to infrastructure build and ignore a much stronger faction until I was ready to take them down. 

made a challenging game and starting position a cakewalk.