At present, when more advanced units become available, the earlier units become obsolete. You won't build them anymore as they can't compete with the more advanced units. So from the 8 or so units available per race, only about 2 will remain useful in armies once a single city of a race is able to build the advanced units. What use are spearmen and swordsmen once pikemen and paladins are available? And actually, the starting units from captured races are also obsolete once your most advanced race can build advanced units. Maybe pikemen are even obsolete once paladins are available.

So? What's the big deal?

Maybe not a big deal. It doesn't actually destroy the game or something. But it reduces flavour, removes variation in unit buildup from the game for no really good reason. With the undead which cannot capture races, you'll have very little variation in you final armies. And all kinds of early units which have some special flavour won't be constructed anymore. Even the elves won't build archers after the starting game which just feels wrong.

Proposition

- Let all units start at basic level 1
- Expand the experience bonus of military buildings so that the first one will promote units to level 2, the next one to level 3, the next one to level 4 and so on.
- This means that advanced units of course will never be build at level 1 as you need advanced military buildings to be even able to construct them.
- Let all normal race units have the same level cap, say level 10 or 12 or something
- Let advanced military buildings give a low experience boost per turn that you station the units in a city. Maybe allow units faster training for a gold/mana fee. That way, you can create a special purpose offensive army with high level units and let the rest train slowly in your cities.
- Place altars of battle terrain features around the map where you can train units further for gold/mana beyond a certain level.
- Maybe some higher levels are only attainable through combat.
- A warlord can train units to a higher level.

Create variation in units due to difference in weaponry, armor, attibute bonuses, movement speed, flying, special saving throw bonusus, mundane resistance, special elemental resistance, upkeep, all kinds of special abilities like throwing, teleporting, merging, aura's. But every unit can gain the same max level.

All units don't have to be exactly similar in power at a certain level. Level 8 spearmen can be a little weaker than level 8 pikemen because pikemen have negate first strike/charge, better damage due to higher strength, slightly higher hitpoints due to better constitution, better armor and for balance a higher upkeep and construction cost. But maybe the level 8 pikeman cannot beat the level 10 spearman or two level 8 spearmen.
Improve the spellbooks of casters as they gain levels, so a level 8 grey mage can do different stuff than a level 4 grey mage.
Allow units that enter a city access to upgrade their weapons/armor with the special resources available to that city. It's weird that you cannot provide your best level 10 elite paladins with adamantine weapons once the material becomes available in your empire.
For more streamlined gameplay: Allow resources to be spread around an empire connected with roads/shipyards. That way, you don't have to micromanage and build all your units in the few resource cities.

Enjoy a varied army of level 8 units which all add something different to your army instead of a more bland army of 12 paladins and a hero.