... difficulties above normal aren't balanced
at all, last I checked. Unless DG has changed stances, T4 is balanced around normal and everything else isn't actually there to be seriously considered for balance changes.
Bugfixing, yes, but insofar as balance is concerned nightmare and up aren't really there. At most, they ring bells for stuff that needs to be nerfed lest normal be too easily trivialized, ha.
That you can make it easier on yourself by running around and drowning the surplus of townsfolk is... fairly unlikely to be changed, because it's a problem that doesn't particularly
exist in normal and thus isn't needed to be fixed.
Basically, while they're called difficulty settings, they're closer to extra modes or somethin', not genuine, balanced, difficulty settings. They're just there for fun, and because folks kept asking for them.
Anyone's welcome to make addons adjusting the higher difficulties, though, I do believe. Think there's actually been a couple...
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... anyway, it mostly just irks me a bit to see people complain about the (almost entirely incidental) balance of nightmare+.
Of course it's not balanced and wonky things happen in the game modes that have had basically no attempt to be balanced and are there as much to see what breaks as they are to play