The differences between the difficulties in XCOM:EU was well known, but I can't find any information on how they differ in XCOM 2. The differences are probably all stored away in config files, but I haven't had time to dig through them yet.
How do the different difficulty levels vary?
Best Answer
They vary a lot. The below is by no means an exhaustive list; it contains just the highlights of what I've found from perusing the INI files and a bit of the code.
Aim cheating
Found in: XComGameCore.ini, AimAssistDifficulties
On every difficulty except Legend, the game applies a number of modifiers to both your attacks and the aliens' attacks. There are five categories:
I'm not sure why Commander gives you a miss streak bonus (which is actually higher than Rookie or Veteran). Judging by the comments in the code, it's an oversight and might get patched out.
Other tactical game tweaks
Strategic game
Found in: XComGameData.ini, all over the place
Almost too much to list here.
Many of the changes are designed so that Legend, which starts out harder, doesn't quickly scale into an unwinnable mess. For example, general difficulty starts higher on Legend, but it grows more slowly than even Veteran does. Legend will still remain ahead of Veteran even with the scaling, though.