Interesting video, and welcome back! I think the changes are interesting.
Regarding tactics I do think that having 5 levels is a lot. I think that @shorogyth 's system seems reasonable. I'd also pull the plains bonus out of the tactics system (call it "defensive tactics") and have a separate plains attack bonus. That way horses can have a bonus there, and rangers won't automatically be good attacking on plains. I know it's a third number, but I think it'll be less confusing than tactics being mostly defense bonuses but also one attack bonus.
Also, can you have more than a +-1bonus on some terrains? I feel like most flying units would need more than a -1 bonus on caves, especially because tactics give them bonuses.
I agree with the relentless issue. I think it's cool for some units to ignore your defensive terrain advantage, but they should be rare and therefore scary. Having basically all orcs be relentless is pretty silly and makes plains better for defense than cities.
Regarding unit abilities, I don't think rock paper scissors is necessarily bad, especially because not all factions are equally strong in each. If each faction has different strengths and weaknesses, it forces factions to collaborate more, and stops things from snowballing as much if one faction falls.
Eg Gondor would spam rangers because they have good defense bonuses and would kill the winged nazgul (thereby denying mordor's leadership), so you could send flanking cavalry from Rhun or harad to eliminate them. Elven archers were much stronger than the spearmen, but fell very quickly to wargs, which forced the elves to diversify more. In particular, Isengard had no ranged units, so Rohan's flank cavalry was especially dangerous since it would directly target the fires of orthanc, and so isengard had to spend a lot of effort screening its siege forces.
I think ranged support feels reasonable. I like all abilities that encourage using a variety of units. Eg the galadhrim archers are one of the most powerful units in the game, but they require you to buy the weaker elven spearmen to unlock their full value.
I like the change to charge, since before formation made those units a liability because you couldn't make them not charge. Eg the warg riders were essentially useless for angmar because of this and rohan suffered hard.
I do like the new ambush mechanic since it encourages more diversity in unit selection. I do think it should be allowed in cities though (that was the whole siege of osgilliath), and the fact that only a certain number of units can ambush will balance it. I'm not sure I like scouting as it is though. If scouting eliminates ambush, then you just need 1-2 units with scouting in your army and you're fine. And if those units are otherwise useful (eg rangers) then it makes ambushers useless. Maybe scouting should be like spearwall? Just decreasing the effectiveness of ambush so it's less good but still useful? So maybe barrow wights would have an ambush of 6, then eg warg scouts could have a scouting of 2, rangers 3, and wizards 6x2 or sth?
I feel like something missing in the game is some notion of hit and run tactics for cavalry. Cavalry is expensive and strong and excels at taking out small groups, but you often can't take advantage of this because if you do it exposes your cavalry to counterattack where they won't make up their PU values. Meanwhile air units can do this which gives angmar and mordor a big advantage. Maybe some cavalry could have an ability wherein they (and only they) can independently retreat after the first round of combat, even if there's a win? This still requires some thought, since if you don't have a win in your first round you have to decide if it's worth leaving your cavalry open to guarantee the win, and cavalry is still worse than flying units since they don't get the whole combat or a noncombat move. But it makes cavalry much more tactically interesting
Also a general thought, but I think rangers need to be a higher tier of ranged unit. They have excellent tactics, mountaineer, high movement, anti-flying, scouting, ambush, support, and maybe more. And given the lore this makes sense, but also in the lore they aren't common at all - the Dunedain are solitary and dying out. So I think buffing them and treating them more like weak creatures than elite infantry would make more sense. And then you could maybe have some weaker version for gondor representing Faramir's rangers which are just elite infantry
Settlers Fallen Empire Manual pdf unchanged