Hostile units spawn randomly across the map and are controlled by the server. Attacking them is a good way for the commander to gain experience and resources without engaging another player. The most common hostiles are Rebels and Orcs, while more difficult to find are Trolls and Mammoths. There are also rare hostiles like the Red Dragon and especially the Black Dragon which only a strong army can bring down (or even capture).
Defeating hostiles will reward the commander with experience and resources (Lumber, Stone, Iron, Gold and Horses). There is also a small chance that hostiles carry valuable resources like Palladium and Diamond.
Attacking a dragon is not the same as attacking a group of enemy units (see combat mechanics). During the battle there is no limit on the number of units that can engage a dragon, which means a big group of units must be formed in the formation to kill the dragon. A group of 1200 Knights may be able to kill a dragon assuming army morale is high.
Dragons can also be captured using magic. A dragon will be captured if there are 150 Mages in the army and 100 Diamonds that will be used to cast the spell. Once captured dragons become bounded to the commander that captured them and cannot be transferred. Also a commander cannot have more than one dragon under his command.
Krakens are rare but are a grave danger to the fleet that encounters them (they cannot be captured). To defeat a Kraken a fleet must have a group of ships strong enough to crush its defenses, for example a group od 35 Frigates would be enough to bring it down.