I like the difficulty systems in Supergiant games a lot. They basically give you toggles which act as challenges which make the game harder, so you can turn them on to increase your rewards. In Pyre, there is an option to make enemy AI better, in addition to options which increase the enemy's stats and change various other toggles. To that extent, I don't really agree with you when you say that increasing numbers isn't the same as increasing difficulty. While it can make the game feel bad (bullet sponges are one of my least favorite things in games), it is something that can be done well. By increasing these various variables, it forces you to play with less room for error, which often requires greater skill or a change in tactics to react to.
So yeah, improving AI with difficulty could provide benefits, but it is far from the only good option when it comes to difficulty increases.







