Lords of Magic is a blend of turn based action on the world map, and real time combat on a small map when armies collide. The game is divided into eight "faiths." The four elemental faiths are water, fire, air, and earth; the four other faiths are life, death, order, and chaos. The faiths share major themes among their units; for example, the Chaos faith is composed of barbarians, while the Order faith (its opposite) is composed of medieval knights and traditional wizards.
There are two major types of units, champions and fodder units. An army can be composed of up to three heroes and nine normal units. The heroes are powerful individuals who may wield artifacts of power. The fodder unit is actually a group of three units that are commanded and move as one. The maximum level for the fodder is 5 (except for one unit in the Special Edition), for the champion units, 10, and for a Lord (a unique champion), 12.
Players assume the role of a hero of their faith, called a Lord. If your Lord dies, you lose. Players choose their Lord from three classes: warrior, mage, and thief. At the beginning of the game, the player has only a few faithful companions to help him. The player and his companions begin by cleaning out the dens near their faith's capital, collecting resources, and building up fame and experience. The first major hurdle the player has to overcome is cleansing their nearby great temple of the taint of the Death worshipers, which earns them the respect of their people and gives them control of the capital.
Once this is achieved, the gameplay shifts from focusing the hero's party to one of acquiring resources, building armies, and training unites. Along the way, the player may gain allies from the other friendly faiths by cleansing their great temples, or they can conquer opposing faiths by conquering their capital and killing their lord. Eventually, the game is won when the player defeats Balkoth, the Lord of Death and the servant of Golgoth. Players can also liberate nearby villages, located on the borders between faiths, in order to create units from another faith without conquering them.
After a player has finished the game once, they can then play as the Death faction and even as Balkoth (if the mage class was chosen). When playing as Death, the player wins by defeating all the other faiths.
The game uses three primary resources: gold, ale, and crystals. Two additional resources are fame and followers; followers work in the capital collecting money, and are spent on upgrading buildings and training units. Followers arrive once a week (on days that are multiples of seven). Fame determines the rate that followers join the hero, at a rate of approximately one follower per forty fame. Major recent events, like freeing a great temple, will draw additional followers that week. Additionally, in the capital the player may trade resources among each other, spend crystals to be healed, or spend fame to beg for gold.
Players also acquire artifacts that empower their lords, giving them additional armor, mana, or allowing them to cast spells. Scrolls are particularly useful, allowing mages to cast spells from other faiths. If a scroll is equipped to a mage of the same faith (a fire scroll equipped by a fire mage), the scroll disappears and all that player's mages learn that spell. Some spells can only be learned using scrolls.
Crystals are the primary resource used for the mages. Mages and their summoned units cost crystals and ale to hire, and crystals for upkeep. Crystals are also spent for mana potions for the mages. Similarly, ale is the primary resource used for melee units, and gold is the primary resource for thieves and archers. Each faith is balanced with an emphasis on different types of units, but high level champions using artifacts are the most powerful units available.
One of the best things about Lords of Magic was the richness of the world. The instruction manual was littered with memorable quotes and snippets of lore.
One of the worst things about the game was that it was littered with horrible bugs, primarily that everything could cause the game to crash. This included everything from changing the world map resolution to casting spells to entering or leaving a combat map. A patch was eventually released that addressed many of the game's problems, and the Special Edition release was not as plagued by the same problems.