How does the difficulty alter the game?

[tsavo]

Originally Posted by Nanaki

Although I am suprised, if you are playing on the hardest difficulty, XB-19 has the occasional squad of Hrimthurs that are armed with some pretty nasty MIRVs, nasty enough to rip even Wyverns equipped with the best Flares a new one.

I play hard, do we have hardest difficulty?
never use flare, laser defence only(it is a green one picked-up from other fights), and keep good distance always.
just noticed Greyhair is 25% better in anit-missile, lucky me