Walkthrough

Summary
Here you will find some tips for beating challenging levels (aka all of them) and how to utilize your XP and gold better. If you have anything to add, feel free to do so.

For general information on each Island, check here.

Sunfall Isle
Most of the levels in the first island are pretty easy, and you should be able to get through them with no trouble by simply knowing the basic rule: swords counter spears that counter cavalry that counter ranged that counter sword and spear. If you're still having problems, use the simple Guardsman+Archer combo and you should be fine. (Put down a Guardsman with an Archer behind him)

Taurania
Difficulty escalates quickly in this island. From Orc Marauders to Berserkers, you're going to need some tough units if you want to have a chance. Pikemen aren't actually that great, at least compared to Guardsman, since Guardsman can actually do something except for killing cavalry, and even at that they aren't much worse than the Pikeman.

For dealing with the Berserkers, you'll have to spend some money. A strong melee front line with 2-3 units and then 1-2 ranged units behind should keep you safe from any Berserkers, and depending on which units you use, Marauders.

Lochar Castle
Your main problem is probably going to be the Bone Fiends. They decimate your infantry and cavalry, but they do less damage against Legionaries (Your only heavy units at this stage of the game), so use those and put an Archer behind them. If you can't or don't want to, put 1 or 2 Guardsmen and then a Javelin behind them. This strategy works extremely well in most levels. Even more so the more upgraded they both are.

Spear units are essentially useless against the skeletons, as they have no cavalry. Make sure you have invested some of your XP in HP and sword damage. (Ranged upgrades are also fine)

If you are still having trouble, try advancing more in the campaign and come back to this level later. It is optional, after all.

Mistmorne
This Island is quite difficult. Along with natural regeneration and occasional parries, your Maru opponents will also be boasting high speeds, which can be quite a problem to deal with. They do have some weaknesses, such as their lack of cavalry, meaning that you can focus on upgrading your sword and ranged units. Legionaries are exceptionally powerful here, although they will take heavy damage from reef hunters (the enemy's ranged javelin throwers), so leveling up the deflect ability is a good idea (you can find it in the first upgrades row, third column).

Pyrestone
Here you will once again face the nasty pirates. They're not that hard to beat, at least compared to the other enemies in the game. Further investing in your Legionaries and Centurions greatly pays off, but you will still have to provide Archer support for them, as they will have a hard time dealing with Gladiators.

Dragon Sisters
Good luck. You'll need it. Seriously.

Cave Ogres OBLITERATE heavy units, so Legionaries and Centurions will have a hard time against them.

Berserkers can already run down entire lines of soldiers if they are not in the best of formations, and Sons of Khargat can do that, but somehow even better.

Don't let your opponent stack morale to prevent them from launching waves.

Try to kill the Sons of Khargat before they kill you, as they are not that resistant. They can sustain themselves by killing units, so use the tankiest units you have against them.

Sun Priests do not work well here, as the regen they provide is simply too slow to make up for their cost.

Rosewall
This level is a lot easier compared to the others in this island. Utilize the rock paper scissors aspect of cavalry, spear and swords and you should be fine.

Second Isle
As long as you have good spear upgrades, most of these levels should be easy. 2 Guardsman+Javelin defeats an Iron Rider (if you have upgraded these units enough).

Templars are helpful against cave ogres.

Ephira
The spoopy skeletons in this island utilize a lot of deflection, so be careful if you rely too much on ranged units. Bone Monstrosities are pretty weak by this point.

Bone Lurkers have poison, so heavy units beware.

Tomb Lords take minimum damage from ranged attacks and heal for great amounts. Use tough units and Moon Priestess to minimize their healing and take them down.

Eldminister
The Maru here are extremely tough and will not give in without a fight. You will need heavy damage to take these guys down. If you're having trouble, try using Moon Priestess or just advance in the normal campaign and come back later. It's an optional level after all.

Furion
Nothing new here. Just old enemies, re-arranged. Use the same tactics as before, and be sure you have good spear infantry for the early and last levels, so you don't have to spend much to get rid of cavalry.

Make good use of Liegeblades. They are incredibly powerful and will destroy even the strongest of enemies.

Bloodstone
Same thing as the previous level, red moor. Use spear units (Guardsmen will do) to take down cavalry and Liegeblades for the Sons of Khargat.

Ironhall
Same as the regular levels, but with more orcs. Use spear for cavalry, Liegeblades for Nightstalkers.

Catanis
The last Island. Here you will find everything you faced before, but stronger. Utilize the same tactics as before, but with your new units. Liegeblades should be able to sweep through most of the island.

Red Citadel
This is it. The last level. You cannot let your opponents through, as the moment they launch a wave, you are dead. The Reaper of Souls crushes even the strongest of lines, and has incredibly long range. You have to wait for them to get close enough to you before sending units in their row so that they cannot attack from a safe distance. Shieldbreakers and Moon Priestess perform miracles against such monstrosities. (Centurions are okay, although they will not do anything against the Reaper themselves, the Centurion's job is basically to give the warcry bonus and sit there)

Beware, however, that Shieldbreakers lack the deflect ability, so they will get killed by ranged units.

Did I mention that, at full upgrades, a Shieldbreaker can 1v1 a Reaper of Souls and win?