I had the same experience where fights prior to level 3 were balanced: they were extremely difficult, I had to run away from most of them, and those that I won required a great deal of effort.
Rant about the early game encounters being 'too hard':
I completely disagree with people saying that you should not get utterly destroyed in the first few encounters after leaving the town. From what I gathered with the townspeople, Cyceal was fighting the undead outside for years and only managed to hang on because of Arhu and his magical defenses.
It makes no sense for you to walk out of the town and be able to slaughter any nontrivial amount of zombies and skeletons. The only reason people expect to be able to do that is because 99% of games in the past decade have made early game fights absurdly easy. "You just saved our entire town from some enormous demon as a level 1 warrior using a copper sword. We are in your debt." and stuff along those lines.
I, and many others, really appreciate that this game takes a realistic approach to the early game so that the gameplay does not clash with the storyline. However, this is a totally different discussion, and should be done in another thread.
As others have pointed out, the game immediately becomes trivial once you find your first mediocre-average weapon. However, the balance changes we need are much more than a simple number rework on weapon damage and monster HP as others have suggested.
If weapons were reworked so that the strongest and weakest weapons in the game did not have a huge difference between them, then both looting, crafting, trading, and gold all become useless. Why would I bother learning how the crafting system works or saving up gold to buy from vendors if I'm only getting a 5 point damage boost at the end of it? Imagine identifying all your loot if you knew that no significant improvement could come out at the end of it.
There needs to be a huge range between a random weapon you find and a great one you buy or craft in order for these major systems to function, so the difficulty of the game must be somewhat independent of the damage from the weapon you are using.
A great example of this is the Lighthouse fight, which seems to be widely praised as the most challenging and best encounter in the game.
The reason this fight is great from a balance standpoint is the reason why it is challenging:
1. You have to react to what the enemies do.
As soon as the fight starts, one of your characters has multiple dogs and archers attacking him. He will almost surely die the second turn unless you do something about it. 2. There is a significant asymmetry in the enemies that you are fighting.
The dogs are easy to kill but get resurrected every turn. The archers are hard to get to, but deal the most damage. The ghoul just needs to be killed immediately, but is protected by the archers.3. The challenge is not killing the enemies, but in surviving while you do so.
Even if you have great weapons, you will still be at the risk of dying unless you play it out properly. Obviously good weapons make it easier, but some of the challenge still remains despite it.Compare this to any of the orc, skeleton, or cultist fights.
There are a bunch of orcs. Some of them are melee. Some of them are ranged. Some of them heal their allies a little bit. All of them have a high pool of HP and deal OK damage. There is nothing to react to. It doesn't really make much of a difference on who you kill first. The only "challenge" is killing them before they kill you.
Since there are no other elements at play, the fight just turns into a: is your weapon good enough to kill them before they kill you?
Just to list some easy to code ways to make current fights challenging in a good way, rather than a "gear-check" of boosting pure numbers. The idea behind these is that the player has to react to what the enemies are doing and is encouraged to kill the enemies in a certain order. Since the enemies they need to kill are way off in the back, they face the consequences of getting attacked the entire time they try to move to kill them.
1. Zombies leave a trail of poison wherever they run.Makes you really consider movement. If the zombie follows you, you have more poison to deal with.
2. Add skeleton shamans that deal no damage, but summon a relatively weak zombie dog / skeleton every other turn and run further away from you whenever they are not doing so.Do you try to chase down the thing dealing no damage to you right now, or deal with the actual threats?
3. Give certain enemies powerful defense reduction curses on a long cooldown.If you charge straight in with Madora, you need to decide if you might just need to get her out of the thick of things and wait or come to her aid.
4. In all fights, buff the damage of ranged enemies, but give melee the chance on hit to cripple/blind/etc. for several turns. Depending on the fight, you would want to take out one or the other first. Gives you a choice with significant consequences for how the battle will play out.
5. Add additional sleeping enemies to fights. They don't attack until they are attacked or turn 5. Every turn, they place a 30% damage and health boost on themselves. Do you want to deal with the weak version now, or later?
6. Add shamans that deal no damage, but cast a long-duration curse or buff on someone every turn. Are you going to try to end the fight fast before the curses make a significant difference, or will you actually need to kill that thing now?
7. Normal enemies (look just like any skeleton warrior, etc.) that summon enemies around them when they die.Surprise! Makes the player react to what happens during the fight.
And so on and so forth.
What I feel is important about changes like these is that they do not require a massive amount of work on enemy AI. You are simply giving enemies a basic skill that fundamentally changes how the fight is played out. The resulting change typically forces you to make a decision that would yield a different result from one fight to another.
I'm not saying that we don't need a numbers change on weapons / enemy damage, etc. We do. Improved enemy AI would also be fantastic. But until Larian gives us meaningful decisions to make about how to approach fights by changing the enemies we encounter, any balance changes they do will never improve the combat experience. It will either be easy and boring (like it is now), or difficult and tedious.