does anyone know the difference between the difficulties besides the health bar difference

Its just the health, don't even dignify the difficulty settings by changing them, thats my view.
The only real way to seek out more difficult challenges is to climb high mountains and enter the caves and dungeons at the top, for some reason they're more difficult the higher they are.

Higher settings increase the damage taken by the player and decrease the damage done by the player; that's all.

This.

It doesn't even effect summons or companions.

I used this to my advantage in skyrim and oblivion.
On a Curious note what does it take to amp up the AI in npc's in video games?

Quite so! However, if you want more enemies and of a tougher nature, just be patient and get your levels up. You will find that a high levels you'll get like five or six wolves in a pack instead of two and I've even had three Sabrecats together in a pack (near Robbers Gorge). So the game does respond to make it harder as you go, but not I'm afraid by just moving the slider.

There are mods which will greatly increase the difficulty, but the slider does noting but change hit points. My current girl is badly under-leveled and having a very hard time with falmer. Two are more than she can handle at once, so there is a lot of summoning, running away and healing going on.

Yeah, but that's not a bad thing. Thats realism, well I mean as far as a fantasy game can be real. My girl on Legendary has the same problem. Falmer archers are two shot lethal and you can't watch them while fighting off a melee Falmer at the same time.

But too easy is no fun right?

As stated above, the slider only changes the amount of damage taken and received.

Yup, brain fart. That is what i meant.

By herself its all stealth, or using a doorway to limit who can fight, or a lot of running away. Summons and companions let her belt people from behind. She picked 2 hand early for the reach and so far its not let her down.

Time and effort.

That, in and of itself, is not the problem. The problem, at least in Skyrim's case, is that the game was designed as such to level enemies to the point where they are nothing but walls of hitpoints, even on Adept. They are totally offense heavy, have no real defensive capabilities (perks in defense to greatly increase their AR, etc). Therefore, on your end, you end up having to hit a bag of flesh with a legendary sword a dozen times before they die, which is just ridiculous, and makes many of the offensive perks the player gets (weapon specialty perks, critical damage, etc) all but useless.

Unfortunately the difficulty levels don't add more enemies or make the enemy AI more intelligent. Just changing damage is the laziest method to add difficulty. It's done this way to also keep the game's performance the same, and the amount of experience points the player gets the same.

If you want more enemies and better AI you have to play on PC and get mods.

Welcome to the forum. Here's a http://images.uesp.net/c/c4/Fishystick.jpg for you!

It should be mentioned that in higher difficulties you will be leveling faster because it takes longer to kill things, so it's a very awkward mechanic honestly, if you're on PC you can use mods to increase the difficultiy in a meaningful way not just gimping yourself.

No, TES has the learn-by-doing system, and it takes a lot more doing to kill enemies with the HP Bloat Mode setting above normal.

Also in Fallout 3 using higher bloat modes increased XP awards for killing enemies.

Not to disagree with everyone (since I don't know this first hand) but a developer friend told me that changing the difficulty not only alters the damage dealt/taken numbers, but it also changes the type (and possibly number) of baddies. Specifically, random encounters in the wild escalate from stuff like wolves to sabre cats and cave bears etc.

This is easy to very if someone wants to go through the trouble. I'm on Xbox, Master difficulty and try to stay away from the north and west until my PCs are fairly established/robust.

Well, that's generally true with exception of Destruction, according to uesp:
" Destruction XP gain is reduced at difficulty settings higher than Adept, but not increased at lower ones. "
But yeah, even with block and armor skills, since you endure more damage you level faster, which in my opinion should not be a consequence of wanting a more difficult experience.

No it just gimps the damage you give and buffs the damage you recieve.

Not entirely. There's tons of examples that do prove what you say, but most of the time, the difference is between mindlessly charging 10 bandits on your own, and between circling around two wolves in hopes of ambushing them because having them both on you at the same time means certain death, so you sneak about, time your attack, and even the dodging, healing, movement etc. works completely different than on lower levels, so it doesn't just come down to enemies being health walls. It definitely isn't one of the more thought out game designs, but while it doesn't increase the enemy AI, it definitely requires increased player reflexes and thinking.

Not correct, that is changed by player's level, not the set difficulty. I've been through every Skyrim's location hundreds of times on very different levels on various difficulties, and unless every single re-installation of my game was messed up, that info is definitely not correct.

Oh, i was unaware of that.

They sure do hate magic in SKyrim, don't they?