The forward watchtower in the south, a rapidly-improvised keep built to overlook and protect workers for the site they planned to establish the real tower on, evacuates most of its garrison downriver when it sees three thousand skeletal champions coming for it, while a small garrison stays to trade bodies for time. The half-built line of secondary watchtowers on the marsh's edge is similarly abandoned. 

(Razmir's empire lasted weeks. Weeks. They thought he'd hold out for a year or two at least.)

A small force on the swamp side of the Vistear holds the half-built tower there, but the bulk of their army on the east side of the Shudderwood is mustered in and around the half-built castle, and when the force around Chastel gathers, it has four hundred knights, with a city guard recently expanded to two hundred men, and twelve hundred light infantry - most of the male population and some of the female - drawn up in a militia along with it.

It is, in fact, legitimately true that a downside of recruiting your armies from across more than four hundred years of time and military development, and recruiting heavily from elite specialist organizations and/or Chaotic societies, is that your army will not be optimized for modern warfare. A great many of his berserkers are wielding greataxes, greatswords, and orc double-axes; a great many of his Hellknights fight with longsword and kite shield, as knights fought from foot four hundred years ago, and fewer than one champion in ten is drilled in the pike square. His cavalry rides slow zombie horses or necrocrafts that come out of his and his under-necromancers' Animate Dead budgets, for horses cannot be grateful for being rescued from Hell, or else are the rare handful of knights with a knack for bonding with their steeds so well that the horses could bear the stench of the dead, and there are few of those. On this battlefield he has little strength of horse, though still a little more than Lastwall's four hundred knights, and he would not pit his against theirs and risk the losses he might face.

On the other hand, numbers.

Fourteen thousand skeletal champions and assorted other undead who are heading downstream on riverboats or marching on the banks of the stream will amass their vast forces of infantry, including several thousand archers, and it can be fairly said that they offer the Lozeri militias a quizzical look.

Ksiaze, flying circles above the army on his zombie gryphon, will send a herald across the banks - one of the villagers who grew up under the shadow of his rule:

"The great Wielki Ksiaze offers you an opportunity to surrender."

The militia is largely armed with pointy sticks. (Technically, 'longspears', which can be distinguished from pikes by the fact that it is much, much easier to train someone with no idea what he's doing how to use a ten-foot spear than a fifteen-foot one.)

This is not the correct weapon against skeletons.

They are also armed with devices for propelling pointy sticks at their enemies at very high speeds. (Classically known as 'hunting bows'.)

This is also not the correct weapon against skeletons.

(In their defense, they're from Lozeri, where the undead take a back seat to wolves and werewolves as a threat.)

... What are the surrender terms?

"Should the people of Lozeri acknowledge the reborn Vasilas Ustav, once and present King of Ustalav as their rightful lord and Wielki Ksaize as Emperor over him, drive out the treacherous usurpers of Lastwall on whose arms the tyranny of the false god Razmir was founded, and yield their fortified places to the armies of Wielki Ksaize, then the great Wielki Ksaize will permit the people of Lozeri to retain their palatine government under His protection. Should they defy him, no mercy will be shown; the city of Chastel will be utterly razed, its people slaughtered, and no captain of your armies nor counsellor of your court shall receive the rest of death."

... Seems fair to them.

Did they forget about their Aura of Courage?

There's fear resistance, and there's threat resistance, and these are not, actually, the same thing.

... The militia archers are already inside their fortifications.

Paladins are incapable of feeling fear. And the offer to the knights of Lastwall?

The herald is to tell them that if they abandon their fortifications without sabotage and flee for their pathetic lives, the great Wielki Ksiaze will give them a three-hour lead before hunting them down like animals.

Paladins don't feel fear. It will, actually, be a horrible bloody disaster in which quite a lot of them die if they need to start fighting their own allies inside and outside the walls, or if the people of Chastel get massacred because they weren't willing to turn against the paladins who were their captains and drillmasters.

But you cannot extort paladins like that, and bar the pointless and counterproductive massacre it would still be better than all their stores of money and gear falling into Ksaize's hands without a fight. The deal is that they get twenty-four hours to evacuate, counting the right to remove all the stuff they can carry and/or load into their riverboats, before Wielki Ksiaze starts taking any hostile actions towards them, and any of the people of Chastel who would rather evacuate into the interior than be ruled by an undead tyrant can do that.

Any of the people of Chastel except the palatine council. Ksiaze wants them as hostages for his puppet government.

Any who claim the status of members of the Palatine Council of Lozeri who wish to flee will not have the knights of Lastwall obstructing them, but will also not have the knights of Lastwall providing them passage. Acceptable?

Make it "were recognized by the people of Chastel as possessing the status of members of the Palatine Council yesterday" and you have a deal.

The evacuation commences.

And Ksiaze's soldiers will reoccupy the fortress once the paladins have evacuated and if a couple of members of the Palatine Council flee nobody's stopping him from hunting them down, but most of his army isn't waiting twenty-four hours - it's occupying Lozeri and then heading further downstream towards Odranto. 

Though he, himself, has higher priorities. Ksiaze's chief purpose for arranging a surrender was so that he would still have all his spells remaining, even if Lastwall made a heroic attempt to kill him personally, for which all of his personal wards and staying at very long distance would not suffice if they had significantly stronger resources than he expected.

(Ksiaze is much harder to kill than a typical wizard, being a lich, and does not stay dead if killed, being a lich, and also well aware that in the Great Taxonomy Of Life he is a squishy wizard and four hundred adventurer-class paladins pulling out enchanted longbows and Holy Smiting him from four hundred feet away might be a serious setback in his plans.)

This is because he thinks it is really quite likely that another fight will occur before he can prepare spells, and even if he can't command it he wants to be able to teleport over to join it.

What battle is likely to be fought? Why, the two battles that his armies have been marching through Ardeal to fight. The battle, as his troops press up towards Odranto from two fronts and to Barstoi by one, to stop the enemy forces from forming a coalition, from adapting to their own territory and training new recruits and hiring mercenaries and adventurers in this, their most desperate hour, even if it means dividing his own troops, even if it means detaching small contingents to besiege strongholds in Ardeal and leaving them - if encircled and helpless - in his rear. The battle to cut the Razmiran Road, separate the Order of the Pyre from its bases, and so prevent foreign reinforcements from reaching the north, and the separate battles to seize the Whitsuntide and so cut any support from the west, drive the Razmirans from the river and ultimately crush them, and so the plot for Ksiaze to unite Ustalav under a single reign from which he can begin extracting taxes and labor before any serious foreign (or Southern) intervention occurs, and also demonstrate to Ksiaze's fellows in the Way that nothing will threaten his power except another Shining Crusade, which would be as deadly to them as to himself.

King Ustav has sent a letter to the Red Witch suggesting that he would recognize her, as a fellow Lawful Evil monarch, as a fine choice to rule Sinaria, offering undead immortality, protection from foreign monarchs and not conquering her, should she agree to pay him homage. (He is not, as she might notice, offering to delay the war until she has time to think about the letter. He's Lawful Evil, and while Ksiaze would be pleased if she accepted, his purpose is simply to make her pause and think and not join his enemies until he has the resources to demand, not request, submission or death.)

He has also sent ambassadors to the major powers requesting recognition, though Ksiaze expects to get it from only Geb...

... And, his riverboats proceeding up towards the Worldwound border, Ksiaze has sent a letter to Lastwall politely explaining that he would like it if all their soldiers presently at the Worldwound were declared neutral in the present war, so Lastwall's soldiers don't need to take preemptive action against attacks from the south and he doesn't need to worry about the need to slaughter their pathetic soldiers preemptive attacks from the people who are supposed to guarding the Worldwound.

(He will seal that with his personal seal and get Ustav and all of his most capable Lawful Evil lieutenants and allies Lastwall knows he has to sign it, too. The Worldwound not expanding is everyone's problem.)

Lastwall observes that he is not, actually, offering to not interdict supplies headed for the Worldwound, which will vastly increase their dependence on Mendev and the strain on Mendev's resources, but will still grumpily accept. The Worldwound not expanding is everyone's problem.

His terms for peace with them have now expanded to being that they acknowledge him as rightful overlord of all of Tar-Baphon's former territories, including their whole home territory!

They're still the same terms for everyone else.

The messenger to the Red Witch's court reports that she's off being a high-level adventurer more than a monarch and dealing with some crisis in the swamps. Her governor will pass the message on to her.

Woe to the weaker, woe.

And what pathetic armies have been assembled to bar the path of his marching legions?

Well, whether they bar his way or not depends on just how many troops he has, doesn't it? The Hellknights think they can put together around a hundred and fifty hellknights and eight hundred armigers, all with mounts, as well as perhaps a thousand militiamen, a couple hundred local knights, and one to eight hundred men-at-arms depending on how quickly they need to pull this together?

Ten thousand skeletal champions!

Also some other stuff. But, mostly, ten thousand skeletal champions.