So... apparently the gold a fief has is directly related to the equipment the NPC can purchase for its defending force. As far as I can see, most fiefs have a pretty bad gold to population ratio.
For example: Reyvadin has 276875 for 20000 population, leaving less than 14 gold to equip each troop.
Now it might make sense that villages can only equip their defending troops in peasant garb, but for a large town this seems a bit absurd. Hopefully this gets fixed before people start mustering 1/3+1 armies just to slaughter peasants.
Save the Dashbighans!