A bit more depth

Also an easy way to remove user created factions with steam

You know they did have a terrain defense modifier in the original Elemental. 

I can only assume they decided to remove it for a reason.

Not sure if this mechanic was specifically addressed, but there were many, many little "detail" mechanics that were stripped out because

• After layering all of them it, it was just too complex for most people to keep track of in an enjoyable fashion
• Lots of the small effects were swamped by a few big ones
• The small effects tended to average out over time (so they added complexity without adding impact.)

Basically, they had so much stuff going on that it was hard to tell what was important, so they stripped it down to just the important things. For a more recent example, see the change from FE --> LH where equipment weights were removed in favor of direct initiative modification.

Another way to add depth - penalising ranged units for being adjacent to enemy units. This was done in Heroes of Might and Magic: Being ajacent to an enemy prevented a ranged unit from using its ranged attacks and it could only melee (ie attack said adjacent enemies). If this was implemented, it might make a lot of sense to rush for ranged units quickly to stop them from attacking your own, and summons could be used very interestingly as well.

Distance based damaged penalties for bows/crossbows could work very nicely too.

I'm not sure if these are implementable via modding though.

Depth does not equal a better game.

Almost. I would say that "Depth does not 'necessarily' equal a better game."  Sometimes it does, sometimes it doesn't.

Yeah, this is phrased better.

But depth is expected in a 4x strategy game surely? Isn't the point of these games to make you strategize and think out what you are doing? After all, if one wanted entertainment where one didn't have to think too much, you could play a FPS.

It comes down to how well implemented that depth is.

The game already has depth. Adding more terrain modifiers could be fun, but not necessarily. I don't think the game terribly needs it, at this point. Derek emphasized positioning in combat, and that adds some strategic depth.

Right now (I think Frogboy said this) tactical isn't so much about battle decisions as it is about expresing the consequences of your larger strategic decisions, such as research, city count, faction choices, etc. And that works well, for me.