I heard about this game from the Age of Wonders forum. Apparently it has more diplomatic options than AoW, which is great for me because I much prefer strategy games or god games where the general running of things is the focus or the entirety of the game. Thus I prefer games like Sim City and Caesar to Command and Conquer and Starcraft (though I do enjoy the latter very much too). I also preferred Alpha Centauri to any of the Civ games I've played because it felt like, within reason, you could get through the game with alliances and political scheming rather than just tearing everything up with the latest tech.

But then I read that the diplomacy in this game isn't all that good after all, like in this thread. I notice it does say the unofficial patch has gone some way to fixing that, but can people describe how the diplomacy is in this game and if it still comes down to amassing loads of powerful units?

In theory the game has nice diplomacy, but in practice with the way the AI works if you want to keep things peaceful you basically have to tip-toe around the computer players and give them loads of concessions, and even then they usually end up trying to kill you. So it's pretty much a necessity to get a strong enough military force that you can crush any and all enemy units that will inevitably come knocking on your door.

It isn't. You can do what you want and after 100 turns you'll have a war regardless of how good you was to your neighbours. Diplomacy is only useful for exchanging spells.

You can also use diplomacy to often delay enemies,they will usually take longer to attack.
You can form alliances and sometimes get the enemies to attack each other.

As the final objective of the game is kill/destroy/banish all other wizards, diplomacy in this game has only use early when all parties are more or less balanced between each other. No sane wizard will keep eternal peace knowing that you are plotting to kill him. Would you? ;)

A cunning player can use diplomacy to make wizards fight between themselves and weaken them while accumulating power for itself.

I have found it very useful to ignore them and let them attack me. Like last night, my starting town was at a choke point in the landmass I was on. All the other wizards were on one side of that chokepoint, and on the other was one city (which I conquered early) and water. All I had to do was build sligners in the town at the chokepoint and put Serena the Healer there. Before I knew it the enemy wizards has attacked enough times that all my units were high level, then when I moved out I had a pretty easy time taking them down.

However, I have tried getting them to ally with me against each other - that seems brilliant -but it seemed like they want too much. I couldn't keep paying them and then 100 turns had elapsed and they attacked anyway when I hadn't put enough resources into preparation.