On the status screen, you can see the range of damage your attacks will deal. This is accurate, but how each factor affects it is not explained. Here it is:

Max Damage = (Level Bonus + Stat Bonus + 2) * Weapon Factor
Min Damage = Max Damage / 2

Level Bonus:
1.125 x Level (Warriors, Troll Slayers)
0.938 x Level (Knights, Mage Knights, Champions)
0.750 x Level (Archers, Battlesmiths)
0.563 x Level (Bards, Troubadors)
0.375 x Level (Healers, Wizards, Sages)

In other words, a warrior's max damage goes up +1.125 per level, before weapon mults. These correspond to the x2 through x6 mults in the manual.

For this formula, Level is treated as 2 higher than it really is. Examples:
Level 1 Warrior = 3 x 1.125 = 3.375
Level 10 Wizard = 12 x 0.375 = 4.5

Stat Bonus:
0.375 x Stat (at levels 1-9)
0.469 x Stat (at levels 10-19)
0.563 x Stat (at levels 20-29)
0.656 x Stat (at levels 30-39)
0.750 x Stat (at levels 40-49)
0.844 x Stat (at level 50+ -- not reachable on Insane difficulty until after the final boss)

Thus, your Strength (for melee) or Dexterity (for ranged) contributes more to your damage as your level rises. This keeps it relevant, though it's less impactful than level in LoA 2. This uses the same scaling as other stats.

Weapon Factor:
This is as listed in-game. For serious weapons, this ranges from +90% to +170%, i.e. x1.9 to x2.7.

Armor that increases damage is applied here, additively. For example, if you equip a Sword (+100%) and a Spiked Shield (+15%) you'll deal x2.15 damage.

The Battlesmith "Sharpen" spell is also applied additively here, which unfortunately makes it much, much worse than it sounds. Because weapons have such high mults to begin with, you'll get an actual damage increase of between 3-5% out of it (5% early game, 3% late), not the 10% that you might hope for.

Critical Hits:
Crits deal x2 damage, so they are a pretty big deal. There are very few sources of crit chance:

+10% base chance
+10% dwarf wielding an axe
+10% archer wielding a bow
+33% weapon of Slaying
+0.5%/point of Knowledge (warrior types only)

Unfortunately, Knowledge crit scaling is the one use of stats where there is no scaling for level range. This means that Strength will always be preferable to Knowledge for warriors.

The dwarf axe bonus is nice, but as you can see, using a weapon of Slaying makes a much bigger difference -- in fact, it's the single biggest way you can boost your damage. And while there are no axes of slaying, there are 150+% maces, swords, and bows of slaying.

The archer bow bonus is also nice, and there _are_ slayer bows. However, this +10% is not enough to make up for the damage penalty archers face compared to warriors.

Accuracy:
Despite the name, the Accuracy ability has nothing to do with hitting. Instead, it lets you roll twice for damage and take the better roll. I did the math out, on average you'll deal about 11% more damage with Accuracy present. This isn't game-breaking but it's the next best way to increase your damage output, after Slaying.

Weapon Type Bonuses:
The axe bonus -- ignoring some enemy armor -- sounds good. However, enemy armor stays dramatically lower than your damage potential, even late-game on Insane, so this isn't a meaningful effect.

The sword bonus improves your hit rate 25% of the time. Your hit rate should generally be pretty high even without any investment in Dexterity, so the impact here is also minimal.

Bow Penalties:
Using a bow in one of the front 3 slots (the 3 in the center) incuirs a flat -20% penalty.

Wizardry:
Like Accuracy but for damage spells. However, the impact can vary a bit more since not all spells deal 1x to 2x damage. For the 1x to 4x spells (which tend to be weaker) the effect hits +20%. For Thunderstrike, with a narrower than 2x range, the bonus is around 5-6%. Still worth using, of course.

Armor uses similar scaling to stats. Early on this is useful, but later in the game, even on Normal, armor becomes less impactful. On Insane, this happens quickly.

Protection:
The Protection item ability gives you best-of-two on armor rolls, and so is subject to the same math as Accuracy: on average, it will increase your damage reduction by around 11%. This means that with an Armor total of 8, adding Protection is about as effective as adding +1 Armor. With an Armor total of 16, it's as effective as adding +2 Armor. So in reality, it's not an exciting ability at all.

Evade:
The math on hits and misses is opaque. However, based on testing, it is clear that boosting your Evade stat as much as possible doesn't result in a meaningful increase in opponent misses, nor in your own hits. (It looks like the max evade chance is 10%, and the most you'll get from pumping all free points into Dex is around 3%.) Not worth investing in.

Displacement:
OTOH, a flat 1/3 chance to dodge anything physical, that doesn't require any investment beyond 1 accessory slot, is the best defensive effect in the game.

* New in LoA 2:

Invisibility:
Just as good as displacement against many enemies. Apparently this does stack with displacement, despite the apparent contradiction.

Vitality:
Incredibly powerful early on, when damage numbers are low. Later in the game, it's kind of like +1 to +2 Armor, albeit that it also works against spells and other effects. Not that impressive.

Heroism:
Saves you from death at 1 HP, once per combat. Nice to have, but not nearly as good as Displacement or Invisibility.

HP:
Fighter types will have plenty of HP by default. On Insane, you'll still get one-shot in the late game. However, you can't really add enough HP to consistently survive all these hits, either. And since higher max HP has no impact on healing spells, its effect is minimized in any battles with lots of healing.

Because the MT damage that hits end spots is usually less extreme, though, it can be worth topping up healer (or wizard) HP totals. A high level healer will get more than 2 levels worth of HP from 1 point of Toughness. However, this is less crucial than in LoA 1 due to the Bodybuilding skill, which is +30% HP once maxed.

Healing:
Speaking of healing, Mass Power Heal is so much more efficient than everything else that once you get it, you should abandon other heal spells whenever possible. This even goes for regular Power Heal -- if you have even 2 PCs worth healing, the Mass version is better.

* In LoA 2, Mass Power Heal has a higher arcane requirement. 500 gets you level 4 instead of maxing it out. Hitting 1000, even with the new arcane items, is almost impossible and probably not worth it.

It's widely recognized that a lot of the classes in Amberland are not great. This is still an understatement in LoA 2, but the class comparison has shifted slightly.

Essential Classes:

- Warriors are still the gold standard for damage and still have no drawbacks. The reduction in stat scaling makes Warriors dominate physical damage output even more than they did in LoA 1.

- Healers are obviously necessary for healing. You probably want two to make your life easier, especially on higher difficulties. Mass Power Heal is crucial. Healers also bring the Iron Skin buff (which allows you to stop using slots on Paralysis/Petrification immunity items). Of note, their combat special ability has been mildly nerfed -- it still heals the party and revives unconscious members, but the unconscious members sit at 1 HP instead of being healed up.

- Sages are basically Wizards (see below) with slightly lower MP and none of their buffs, who can cast Mass Power Heal. (And a few other healer spells, but that's the important one.) They don't replace healers due to the lack of Iron Skin and Restoration, but they are a viable choice for a second or third healer. Notably, around levels 10-29, when Healers don't yet have Mass Power Heal, Sages will generally contribute more to the party. Their racial limitations (no humans, no dwarves) aren't ideal, and they do have a bit less HP than healers, but these aren't complete deal-breakers.

Viable but with Drawbacks:

- Wizards are better than in LoA 1, in part because their damage has been souped up, and in part because only one of the endgame bosses (and very few regular enemies) resists the key wizard elements. A good wizard can often do about twice the damage of a warrior when on full blast. There are a few trade-offs: they can't do this consistently when fighting hordes of mobs; you have to manage their MP and rest more often; and finally, wizards have much lower HP (and encumbrance) than warriors.

Although they have MT spells, their primary use isn't crowd control so much as trying to take down dangerous bosses quickly. On Insane especially, you'll want to top up their HP as much as possible so they don't die to MT attacks. And this is a challenge, because they need to work hard to hit 640 Arcane for Thunderstrike.

Wizard buffs are OK but less helpful and relevant than they seem (see below).

The biggest downside is that the one boss that resists all wizard elements is the hardest boss. You're stuck using fire spells for half damage, which is generally going to do less damage than your warriors will be. The hardest non-boss enemy also does, though you can at least use half damage thunder there.

Viable on Normal Only:

- Knights trade a chunk of a Warrior's damage (about 16%, come endgame) for a higher encumbrance limit and a bunch of extra HP. There are times the encumbrance is convenient -- there are some nice plate armors -- but it's never essential, especially on Insane. The extra HP is pretty nice on Normal. On Insane where you can easily be one-shot anyway, it's not worth the damage loss.

Not Worth It:

- Bards deal less damage than warriors, but boost the enitre party's physical attacks by a very small amount, and have some ability to be a backup ST healer. In LoA 1, they earned a spot thanks to their unique Heroic Ballad buff. Without that, there's not much reason to use one. They are the only class that effectively removes fear, and they have an OK buff against confusion/mesmerize, but it's pretty easy to protect against these ailments (especially fear) with items.

Strictly Worse Than Other Classes, Period:

- Troubadors are nearly identical to Bards, but gain more Knowledge over time and less Dexterity -- making them worse archers. They learn some healing spells a few levels later, and have lower MP cost for their buffs.

- Battlesmiths are a bit like Bards, trading a chunk of the warrior's damage potential for a party-boosting buff. Theirs doesn't make up for their personal damage loss, either; and they don't have any healing functionality.

- Troll Slayers have almost the same damage potential as warriors. They autocrit trolls -- but trolls aren't the most common, or the most threatening, of enemies. In exchange for this bonus, they lose two equipment slots. In theory, you could get by with a Troll Slayer in slot 2 or 6, but it'd be taking on a penalty for no gain.

- Champions are knights that deal extra damage to enemy wizards, and a bit more in general -- but give up a pile of HP and a bit of max encumbrance, thus removing the only good points the knight has over the warrior. Warriors do more damage, including against enemy wizards, and are essentially as sturdy.

- Mage Knights trade a big chunk of the warrior's damage potential for mage spells, mostly just direct damage ones -- and they don't have the Knowledge/Arcane to use them effectively. They are also stuck being Elves, which is extra unfortunate for a front liner. Pretty bad.

- Archers trade away a big chunk of a Warrior's damage potential, but all they get in return are direct damage spells. Their bow crit buff isn't enough to make up for their damage loss; warriors actually make better bow users than archers do. Pretty bad.

Besides the freely assigned points (5 at creation + 1 every 3 levels), each class begins with and gains its own unique set of stats. At level 45, classes have the base stats listed below, before race and heritage adjustments. (HP and MP totals include points gained from Toughness and Willpower; Damage is relative damage, before crit or weapon modifiers, but assuming most manual stat points (and some equipment bonuses) go into the damage stat; Arcane assumes no extra Knowledge points, and a +50% staff being wielded for Healer/Wizard/Sage ONLY.)


Notably, Race limitations mean that the Sage has some HP and Encumbrance limitations, while the Champion and especially the Mage Knight have slightly lower HP/damage potential compared to their dwarf-eligible comrades.

Total stat impact of each race/heritage at level 45. I've rolled in the impact of levels gained by humans (+1) and lost by elves (-1). (To simplify this, I've assumed class mults of x5 HP, x4 MP, x6 Melee Damage (Warrior), x5 Arcane w/ 50% Staff and Wizard Knowledge bonus.)


How do these options look for the good class options?

Warrior: Axe crit chance is a nice backup for when Slaying weapons aren't available, but they are pretty much always available in LoA 2. If you really want a warrior to use a bow, you could consider a Human, but barring that, Dwarf is the way to go. Either Dwarf A for HP, or Dwarf B for Encumbrance.

Resist Fire +15 is not as useful as LoA's blanket Resist Fire, so Dwarf C is probably out.

Healer: Healers don't really need MP in LoA 2. Knowledge can be useful, but it's also possible to end up filling out Knowledge needs entirely from items (and manual points can be respecced). So HP is the main focus -- and they might not mind some extra Encumbrance. Go Dwarf B for that; or Dwarf C for a slight HP/Knowledge lean; or Human A for a heavier HP/Knowledge lean.

Wizard: Wizards need the same things Healers need, they just need more of both, so Knowledge and Toughness/HP are somewhat fungible for them. If you want to max out Thunderstrike, Human A is the best option, delivering the highest Arcane boost while still offering a few points of Toughness. However, Wizards also start with painfully low Encumbrance so any boost there is a real boon. If you aren't going to attempt the 640 Arcane hike, I suggest Dwarf B for Encumbrance, or Dwarf A for HP.

Sage: Half-Elf A is probably the best of the bunch. A Sage trying to max out Thunderstrike would want Elf B, but this is pretty rough, as it leaves you with the absolute lowest HP and Encumbrance in the game.

Some final comments:

How much is Encumbrance worth? There's a very rare accessory worth 10 Encumbrance, but what you'll likely find multiple copies of are the 3 Encumbrance accessories. So in accessory terms, 3 Encumbrance compares with 6 Toughness or Knowledge (or whatever stat).

What about skill bonuses? If we take into account the bonuses from Bodybuilding, Concentration, and Athletics (and 1 Encumbrance you get for every 10 Strength), the actual range of values you'll see at endgame, with maxed skills, at level 45 (human 46, elf 44), for all possible race/class combos, is:
HP: 224 to 775
MP: 464 to 677 (for primary mages)
Encumbrance: 12 to 51

As you can see, 464 is generally "enough" MP, but the low ends of HP and Encumbrance are limiting.

The amount you get out of each point of your 5 main stats goes up with your level:

Stat Scaling Multiplier:
Levels 1-9: x1
Levels 10-19: x1.25
Levels 20-29: x1.5
Levels 30-39: x1.75
Levels 40-49: x2
Levels 50+: x2.25 (note, not reachable on Insane difficulty until after the final boss)

* This is reduced scaling compared to LoA I.

Strength
- One of two main components of melee attack damage (see next section)

Dexterity
- One of two main components of ranged attack damage (see next section)
- Hit rate up +2 to +4.5 per point (nearly irrelevant)
- Evade up +1 to +2.25 per point (nearly irrelevant)

Knowledge
- Arcane up +1 to +2.25 per point (doubled for healers/wizards)
- Hybrid types only: Evade up +1 to +2.25 per point
- Fighter types only: Crit up +0.5% per point (no scaling)

Toughness
- 5 HP to 11.25 HP per point (10 HP at level 40-49)

Willpower
- 3 MP to 6.75 MP per point (6 MP at level 40-49)

At level 40-49, primary spellcasters with a 50% staff and no extra investment will have about 415 Arcane. Equipment that adds to Arcane % will be worth about 14 points per 5%. Extra points in Knowledge will be worth 6 each, assuming no change to the % equipment. You can generally fit in some equipment with Knowledge boosts. The Arcane % equipment is harder -- you might see +5% hats. There is some +10% chest armor, but it's a bit on the heavy side for casters and might compete with less replaceable bonuses, like Invisibility. (If you're very lucky, the tier 3 version of the Ancient Magic Staff provides +65% on top of Knowlege +6, but this is extremely rare -- I haven't seen it in any of my playthroughs.)

Healers generally want to end up at 500 Arcane, to get the Power Heal spells to level 4. At level 45, assuming a +50% staff, this will take 14-15 Knowledge.

Wizards would prefer to reach 640 Arcane to max out Thunderstrike, which increases its damage by 1/3 above power level 4 (at 495 Arcane). At level 45, however, this would take 38 Knowledge, so it will take serious effort on Insane. It's generally doable with the right equipment, but it will mean making other sacrifices and probably not putting any manual points into Toughness. For Wizards (and even moreso for Sages) this is rough.

If you are lucky and find a tier 3 Ancient Magic Staff, you can get there with just 22 additional Knowledge.

These have been revamped in LoA 2. Note that although the tooltips list level 50+ enemies, there are only two (Black Dragon and Legendary Barbarian). The final boss is level 45, the other big bads are level 40-45, and only one regular enemy (Eyes of Morgol) hit level 40.

Early on, you'll see a lot of items offering +10 or +15 to a resist. These multiply by item tier, so tier 3 items mostly offer +30 or +45.

Elemental resists cap at 60%. Having a resist level equal to your enemy's experience level, you'll be at 50% resist. This means that early on, 10 resist is plenty, and 20 is sufficient for the bulk of the game.

Status resists cap at 100%, and this is also achieved by having a resist level equal to your enemy's experience level. Again, this means that early on, 10 resist is plenty, and 20 is sufficient for the bulk of the game.

Elemental Resistances:
Acid resistance from LoA 1 has been replaced with Sorcery resistance, which spellcasters will get some free points in based on their Will.

Enemy wizards tend to use a lot of Sorcery element spells, which takes away one of the main uses of the PC wizard's resistance spell (which is fire/ice/lit only).

Status Resistances:
These are important, but not for everyone. There still seem to be no enemy attacks which can afflict PCs in the rear (spots 1, 7) with statuses. And the central 3 slots will get hit more often.

- Paralysis/Petrification is very important in the early midgame, but you can ditch it as soon as you get the Iron Skin spell. If for some reason you're playing with zero healers, you WILL want your 5 front slots fully armored for Resist Paralysis.
- Confusion/Mesmerize is important as soon as it's available. It's not deadly, but it can interfere with your damage output, and that can be deadly. That said, because it's not deadly, you don't necessarily need to hit 100% resist for everyone.
- If you have a Bard, Fear resists aren't crucial. If you don't have a Bard... actually, I have literally never seen Fear get applied in LoA 2. Possibly this is because Fear resists seem to be on every other item.
- Poison doesn't act too quickly and can just be healed, though preventing it is convenient. I guess if you have no one who can cast cure poison, you need these resists.

You can find around 100 crystals in the game (for the magic shop).

For the guild shops, there's somewhere in the neighborhood of 330k gp in the game. About 60-100k will go to fixed costs (like boats and skill teachers). Training will cost about 41k on Normal, or 81k on Insane (3x cost, but fewer levels gained). On Normal, the remainder is probably enough to buy whatever you want. On Insane, with triple prices, you'll need to be pickier. However, there's also significantly less amazing stuff guaranteed to be in shops than in LoA 1.

Chest treasures and guild stock, including which top-tier items show up, and how many of them, can vary significantly between games. There are also a handful of very good fixed items.

On Insane, specifically -- because this is so random, and the game is unforgiving -- you might want to consider save scumming game start for the guild shop in Timberhaven. The real target would be equipment with Displacement, which is quite rare, not guaranteed to show up anywhere, and a huge boon all game long, including against the hardest bosses.

Flails of Slaying are available from the regular (non-random) shop. They aren't top-tier but they are "good enough" to make do with, through the game if necessary.

Speaking of weapons, if you take into account all stat/damage/crit effects, the best weapons in the game are, in order:
1. Grand Flail of Slaying, tier 3 (x4.92)
2. Mighty Mace of Slaying, tier 3 (x4.88)
3. Sword of Slaying, tier 3 (x4.64)
4. Battle Magic Staff, tier 3 (x4.46)
5. Grand Flail of Slaying, tier 2 (x4.36)
6. Mighty Mace of Slaying, tier 2 (x4.32)
7. Flail of Slaying, tier 3 (x4.27) -- guaranteed in regular shop
8. Lord Gerdon's Sword, tier 2 (x4.18) -- unique, guaranteed, also provides Heroism
9. Sword of Slaying, tier 2 (x4.17)
10. Grand Whirling Axe, tier 3 (x4.14 for Dwarves)
11. Mighty Whirling Axe, tier 3 (x4.11 for Dwarves)
12. Slayers Bow, tier 3 (x4.03 with investment in Dexterity)

CHARACTER CREATION
On Normal you can probably be successful with any party that includes at least 1 Healer (preferably) or Sage. 2 will be more consistent (and convenient). But it never hurts to optimize further!

Insane: I recommend the following min-maxed party:
- 3-5 Dwarf Warriors (Heritage A)
- 1 Dwarf Healer (Heritage B)
- 1-3 Half Elf Sages (Heritage A)
- You can titrate the magic component up by replacing 1 or 2 warriors with dwarf wizards, or down by skipping the sage and just running 2 healers. Wizard spells can help you take out some high HP enemies faster or sooner, which can aid progression, especially early on. (On the flip side, needing to rest more frequently can eat up some gp early on when it's scarce.) In a few other cases, however, they will leave your party slightly less punchy (versus enemy wizards) or a bit frailer (versus MT physical attacks), and notably, they aren't ideal in the hardest fight of the game.

The 5 free stat points you get at character creation cannot be respecced (unlike the free points you get later). I recommend putting them somewhere that is guaranteed to be useful: Strength for Warriors, and Toughness for spellcasters. (Wizards or Sages aiming to hit 640 Arcane could opt for Knowledge, but Toughness is safer.)

EXPLORATION AND TREASURE
A lot of quests don't actually require any combat to complete, and can be quite generous with rewards. There's a whole series of these at the start of the game, and then a large slew of them open up when you get the ship.

Insane: There are also quite a few chests in dungeons that can be raided with little to no combat. Grabbing these early can make life much easier. Early on, this includes the Small Dungeon, Bandits Hideout (1F east), Forbidden Caves (1F east), and Great Library basement.

Once you get the ship, there's even more. Most notably, the Red Dragon's treasures can be raided without defeating the Red Dragon, and there's some great stuff there. (It is impossible to do that with the Black Dragon, this time around.)

It is also technically possible to sneak past the Legendary Barbarian. This requires a lot more patience and reloading, but he will sometimes stay in the southern nook of his treasure area even when you walk right past him. This will require a bit of reloading but it can be done, though his treasures aren't typically as exciting.

The ship opens up a lot of areas. Once you've completed quests (the marriage quest, linking the SW castle and a farming hut near the Royal Castle, is incredibly generous), explored towns, raided treasure, and dealt with the easier enemies (like the green lizards, rogues, barbarians, and the Bardacia Caves) the Ogre Fort on the western island is also quite lucrative. In particular, there's a hidden mirror on the top floor which you can shatter for a mind-boggling 100k XP.

COMBAT
Fight enemies one at a time whenever possible (and it's almost always possible). Sometimes this means dancing around a bit before you fight. Leaving a floor (or dungeon entirely) and returning may shake up enemy locations -- especially useful if any enemies clump together and refuse to separate. And do fight everything; you want all the XP you can get.

If you have multiple healers, keep 1 healer in the middle row (spots 2/6) and 1 in the back row (spots 1/7) so enemies will act in between them. Note that this isn't actually possible if you cast Haste -- enemies will then act before the 4 middle/back spots, and after the 4 middle/back spots. Serious downside to Haste.

When you do want to take on the dragons, pay 10,000 gp to the knight in the inn of the castle south of the Red Dragon (phew) for dragon-killing secrets. These dramatically increase all damage dealt to dragons, including with spells.

The Black Dragon superboss is almost identical to the one in LoA 1 -- but it's much more challenging due to other gameplay changes, particular on Insane. This section is dedicated to defeating the Black Dragon on Insane, though the advice is sound on any difficulty.

The Black Dragon attacks twice per round, after PC #1 and then after PC #5. It either uses a ST physical attack for massive damage -- essentially a guaranteed KO if it connects -- or an MT attack in any of the 4 elements, also for massive damage. It picks an attack at random, but it uses the MT attacks more frequently.

In LoA three factors made it possible to defend against these much of the time: relative ease of getting full elemental resistances on all PCs; the Bard's overpowered Guts buff; and to a lesser degree, the Healer's Special to assist with bad turns here or there. All three factors have been weakened. Thus in LoA 2, neither attack can be perfectly defended against, so luck and many retries will be required, but you can stack the odds less against your favor for each:

1. Get high elemental resists (up to 60!) on all PCs, along with HP above 400, or above 500 if possible; this will allow you to survive an elemental attack and (potentially) be healed. Since the Black Dragon is level 50, resists apply at face value, i.e., Resist Fire 15 will reduce damage by 15%, while Resist Cold 60 will reduce damage by 60%.

• Unfortunately, very few items give you 45 resist on their own, let alone 60; the vast majority offer 30 or less. 10 and 15 are the most common. Sorcery in particular is a much less common resist and you won't be able to max it out on everyone, so you will need to rely on luck to avoid receiving too many sorcery MTs. But you may as well buff it as best you can.
  
• There's a guaranteed +45 Fire/Cold/Lit armor in the Red Dragon's hoard; there's another one in the crystal shop, along with two accessories that also offer those resists. If you're tackling the Black Dragon on Insane, these are very possibly what you should spend those crystals on.
  
• The Wizard spell Resist Elements can help a bit. However, it's possible to max out its three resists without it, and Wizards are also frail, difficult to equip, and bad at damage in this particular battle, so having one is a real trade-off.
  
• Fountains are a massive help here. If you are very careful with your timing and use of the griffin, you can fit in 2 to 4 fountain uses. These stack across elements but not for a single element (only the strongest is used there). The best options are (with time used including 1 griffin trip):
  
  • Sorcery +10 (7h45m, Riverfell near magic shop)
    
  • Lit +20 (4h20m, West hermit beyond pond)
    
  • Fire +15 (4h35m, Dungeon of Salamander)
    
  • Cold +10 (4h0m, Elf King, also has Fire +10 if needed)
    
  • Fire +30 (17h10m, East lava area)
    
  • Toughness +3 (4h0m, west of Royal Castle)
  Sorcery +10, Lit +20, Fire +15, Cold +10 is probably the best way to go. Start right by the Sorcery fountain at midnight. This leaves 2-3 hours before midnight by the time you reach the Black Dragon, which should be plenty for combat. (You could also just use the Fire +10 by the Elf King and sub in Toughness +3 for the Fire +15.)

2. Stack Displacement + Invisibility on your front row, which as always will take the vast majority of physical attacks. The dragon can sense invisible, but altogether this still gives you a roughly 50% chance to dodge its attacks.

3. Get Heroism on as many characters as possible. This is much worse than the LoA Bard buff as it can only trigger once per battle, but it helps immensely.

4. Heal when you can (see below). Get your Mass Power Heal users up to 500 Arcane if at all possible, then respec any excess Knowledge into Toughness. (Wizards and Sages should not chase 660 Arcane, getting more Toughness/HP matters a lot more for them here.)

5. Just kill it as quickly as possible. You should already have bought the dragon slaying lesson. Warriors will do most of your damage. Wizards are stuck using fire spells for half damage due to the dragon's resistances, so warriors will outdamage them. It will still take a while.

Strategy depends on your party composition.

If you have less than 2 Mass Power Heal users... you might be stuck. You'd need some pretty crazy luck to survive -- you need MT attacks to be few and extremely spaced out, while also dodging most or all of the ST attacks.

If you have 2 Mass Power Heal users, you just need to avoid having 2 MT attacks in a row. You can't control this, of course, except by reloading after the dragon kills you. X_x (Heroism can save you from this -- once.)

If you have 4 Mass Power Heal users, and a full set of resistances, in theory you can always heal up for the MT attacks, so you really just want to avoid ST deaths as much as possible. This is still more about luck than anything.

Regardless of party comp, reviving characters who die is difficult to justify. The only revival options will start them at 1 HP, and it will take multiple Power Heals for them to even survive one elemental attack from the dragon.

Good luck -- you'll need it. Literally!

Key spells are in bold.

Healer
1 - Heal, Mass Heal, Cure Poison, Regeneration
5 - Restoration
10 - Cure Paralysis
25 - Iron Skin
30 - Power Heal, Mass Power Heal, Cure Petrification

Wizard
1 - Magic Arrow, Power Fist, Fireball, Coldball, Magic Shield
10 - Lightning
15 - Chain Lightning, Cleansing of Mind
20 - Fire Blast, Cone of Ice, Haste
30 - Fire Storm, Calling of Blizzards, Molten Blast, Resist Elements
40 - Thunderstrike, Lava Storm

Sage
1 - Mass Heal, Magic Arrow, Power Fist, Fireball, Coldball
10 - Cure Poison, Lightning
15 - Chain Lightning, Cleansing of Mind
20 - Regeneration, Fire Blast, Cone of Ice
30 - Fire Storm, Calling of Blizzards, Molten Blast
35 - Mass Power Heal
40 - Thunderstrike, Lava Storm

Bard
1 - Heal, Inspire Courage, Song of Courage, Inspiring Ballad
15 - Restoration
20 - Cure Paralysis, Adventurer's Ballad
35 - Power Heal

Troubador
1 - Inspire Courage, Song of Courage, Inspiring Ballad
5 - Heal
15 - Adventurer's Ballad
20 - Cure Paralysis
25 - Restoration
40 - Power Heal

Archer
1 - Power Fist
10 - Fireball
20 - Moonlight Arrow
30 - Fire Blast
40 - Moonlight Blaze
45 - Molten Blast

Battlesmith
1 - Spark, Sharpness
10 - Fireball
20 - Reinforced Armor
30 - Fire Blast
45 - Molten Blast

Mage Knight
1 - Power Fist
5 - Magic Shield
10 - Coldball
15 - Lightning
25 - Chain Lightning, Haste
30 - Cone of Ice
40 - Calling of Blizzards
50 - Thunderstrike

Damage Spell Comparison
Average damage with Wizardry. Best picks in bold.

46 dmg. for 1 MP at 70 Arcane: Magic Arrow
54 dmg. for 8 MP at 35 Arcane: Spark
60 dmg. for 8 MP at 35 Arcane: Power Fist
168 dmg. for 20 MP at 175 Arcane: Moonlight Arrow
194 dmg. for 40 MP at 187 Arcane: Moonlight Blaze (Lv 3)
190 dmg. for 20 MP at 140 Arcane: Lightning
214 dmg. for 30 MP at 350 Arcane: Fire Blast
249 dmg. for 30 MP at 385 Arcane: Cone of Ice
740 dmg. for 50 MP at 500 Arcane: Molten Blast
1340 dmg. for 100 MP at 480 Arcane: Thunderstrike (Lv 4)
1786 dmg. for 100 MP at 640 Arcane: Thunderstrike (Lv 5)

73 dmg. for 12 MP at 70 Arcane: Fireball
80 dmg. for 12 MP at 105 Arcane: Coldball
132 dmg. for 26 MP at 245 Arcane: Chain Lightning
480 dmg. for 40 MP at 400 Arcane: Fire Storm
540 dmg. for 40 MP at 420 Arcane: Calling of Blizzards
1000 dmg. for 120 MP at 495 Arcane: Lava Storm (Lv 4)
1333 dmg. for 120 MP at 660 Arcane: Lava Storm (Lv 5)

Truly unlikely to be reached in normal play:
292 dmg. for 40 MP at 375 Arcane: Moonlight Blaze (Lv 4)
389 dmg. for 40 MP at 500 Arcane: Moonlight Blaze (Lv 5)

Healing Spell Comparison
30 HP for 12 MP at 64 Arcane: Elven Touch
56 HP for 8 MP at 50 Arcane: Heal
180 HP for 40 MP at 150 Arcane: Power Heal (Lv 2) -- likely Bard terminus
240 HP for 40 MP at 300 Arcane: Power Heal (Lv 3)
300 HP for 40 MP at 500 Arcane: Power Heal (Lv 4)

20 HP (x7) for 10 MP at 64 Arcane: Elven Song
38 HP (x7) for 18 MP at 250 Arcane: Mass Heal
180 HP (x7) for 60 MP at 300 Arcane: Mass Power Heal (Lv 3)
225 HP (x7) for 60 MP at 500 Arcane: Mass Power Heal (Lv 4)