Or can I summon all the demons and undead I want, while torturing my populace for better production?

I'm under the impression that 'evil' races will like me more if I'm evil in behavior, and vice versa for elves and so on - but other than that and province level affects for random event choices, does my alignment have any impact on the game?

I ask this because in my first game, the AI on Skilled is bombarding me with highly annoying zombie hordes, something I avoided using for... some reason or another, I'm sure :P

Being evil also affects corruption on the astral, afaik, which is something you don't want to accumulate too much of, though I don't know if alignment effects this per se, or if making evil choices raises corruption and changes your alignment independently.

I don't think corruption matters on the solo map play though (unless you province unrest is affected by having too many lands or something)

What is corruption? (edit: astral corruption I mean, I have seen corruption in shards)
I don't think I ever encountered it and I just conquered my 24th shard as an avatar of purity and goodness.

No, I mean 'random maps', as in, not the campaign ;)

I don't know if evil races like you more or good races like you less... It would be my guess that they do for terms of alliances (and woe unto he who accidentally violates a racial alliance; such as by having a province of said race conquered before the alliance and be allowed to revolt after the alliance was made).

But I don't think there is any other reason to not use those in skirmish mode.

Karma will hit evildoers with epidemics, rats, crop failure.

So, if I torture my subjects, karma joins in on the fun and tortures them further?

They aren't laughing, they become furious and rebel often and I keep on slaughtering the rebels