Spies
Spies have 3 abilities that you should be familiar with. Planting informers will grant you line of site from an enemy position, bribery converts an enemy unit to your side and counter espionage to remove the effects of an enemy spy. Each of these abilities require the use of craft, a spy has a maximum of 1000 and will spend this performing an ability. The speed at which this ability is performed and the rate that craft recovered are determined by upgrades performed at the castle. Spies normally remain hidden but after they use their ability the are exposed and have to wait to become invisible (15 seconds). Russian spies become invisible immediately.
Using
Spies are relatively cheap. They cost gold and iron, which can be a problem when you are trying to mass Heavy Inf./knights/siege but on the plus side you can make Light Inf. without resource conflict. You can use spies on 4 levels.
Level 1: Not at all. This is a massive mistake, a spy is so useful for the cost that you are really missing a trick if you don’t employ at least one.
Level 2: Minimal use. Many people think that using these specialist units is a bit fiddley and beyond their capabilities but just by making one you give yourself the ability to see much of what the enemy has. If you only have a single spy, treat here as a super scout. Infiltrate cities and hang around enemy troops so you get to see what is going on. To gain an informer in an enemy position, just right click the mouse pointer on the enemy building. Usually the best building to go for is the city, it has good line of site and will either reveal full details of the enemy economy or military presence around the forward base. You can also convert enemy civilians to informers, which makes it harder for the enemy to counter-espionage. The minimal use spy also gives you the ability to bribe the odd choice unit such as siege, to help defend an enemy attack. A better use may well be to wait outside a barracks (or siege) deep in enemy territory, if you convert a new unit there it is highly unlikely to be discovered and you could save the unit or just use it to disrupt the key economy cities.
Level 3: Normal use. Usually entails creating 4-6 spies. This gives you the ability to keep all of your enemies under observation and crucially gives you the ability to seriously undermine any enemy attack as well as soften the enemy army up prior to your own attack. The sudden switching of 4 units to your side in the height of a battle can be massive. Using them in a battle rather than before gives you spies a good chance of survival as the remaining enemy units will be too busy fighting military to bother shooting the spies. The micro-management requirements are harder (but see level 4 below) but the gains are much higher.
Level 4: Spam. Something I like to do just for fun, is to see how many units I can convert, current high is 34. To do this you will usually need at least 6 spies and know how to use them. As in level 3 you have to time their use to maximise their survival chances but there are two other factors to consider. First is where to use them. You have invested quite a lot in those spies and as you start to use them your enemy should get wise and build defences against them. It is very important to avoid these, if you start losing spies then you need to seriously rethink your spy strategy, even if it's just to pull them out of the way for a while as spy defences can be temporary. The final factor is the increased micro-management requirement to use so many spies effectively. Fortunately there is a trick that can help you. Simply hit the semicolon key (;) to select a spy and then hit the HOME key to select all spies. Now just right click the units you want to bribe, as you click each unit a spy will expend craft and start the conversion, click again and another spy will go to work. This trick works best if you have them in position (range) first so prepare for using the spies rather than just use them. First of all move them close before activating them.
Countering
Having seen what total nuisance spies can be you really need to know how to deal with them. First of all you need to know what your defences are. Any anti-spying depends totally on spotting them and there are only a few specialist units that can do this, they are Scouts (line), Helicopters and Light ships (line). Due to availability, this basically means scouts. Make sure that you several (and certainly at least 1) scout in any army you make. It's probably a good idea to reel that lone starting scout in and make him useful again (if he isn’t dead yet). By the time you have reached late medieval age there is probably little he can do by scouting apart from blunder into an enemy force and get killed. Make sure that your scouts are in a good position to spot spies, one by your siege is a good idea as your siege is a primary target but also have others in the line. Finally, position to the flanks too, a major problem with spotting spies is that it's only half the solution, you still have to kill them. When you're in the heat of battle your troops have other things to shoot at and your micro-management resources are in demand in the battle. By spotting the spies as they approach, usually ahead of an attack, they will be wiped out by free guns.
Unfortunately, scouts have a nasty habit of dying when in the main army so you must remember to keep making replacements, check on your current scout levels by pressing apostrophe (') then HOME. However, there is one other final thing you can do to counter spies and that is to use outposts. These cheap wooden towers (yes, the ones you probably don't build, not the big shooty ones) will expose spies so build plenty of them, certainly anywhere there is a tower (to auto-kill it) and around your military bases and rally points.
Should a spy get through to your cities you can eliminate the informer by selecting either a scout of a spy and right-clicking the affected building.
Upgrading
Spies are upgraded at the castle as the right hand upgrade line which also upgrades the generals. These upgrades (Tactics, Operations and Strategy) improve a spy's Range, hitpoints, Speed and Line of site.
A 4th Ability
Spies can bribe buildings.
Normally only military units can be bribed but a spy can bribe any building that is in you territory! There are two principle uses for this, one is to bribe enmy buildings stranded by a border push, the other is to take a resigned allies buildings. In this case the most efficient way to do this is to bribe the capital where normal capital capture rules will apply and give you everything.