|Traffic Jam, Level 3A|
For those of you who are players of modern games, you will understand that the encounters that you face and the challenges you come upon are closely balanced to your level and party makeup. You are meant to be able to overcome each encounter and in many cases, it will be through making die rolls against skills, both combat and non-combat, that you careful chose for your characters beforehand. Player skill at the table gets rewarded, but the real skill comes before table time, where you build your man up from the many options available to you.
Not so with old school D&D. There was certainly a system for encounter balancing but it has very little to do with what the players and Referee do before table time. The Referee does prepare encounters and place them, or make rosters of wandering monsters for various areas. But the balancing act of party strength versus encounter danger happens at the table in real time.
You might remember that we observed the relationship between XP (the measure of personal power), encumbrance, speed, and equipment. They are all inextricably linked to each other through the touchstone of the gold piece. But let's go a little further now and link the gold piece up to dungeon levels.
The first dungeon level is the one closest to the surface world. We know this to be true because it is a given in the game. The weakest monsters and traps guard the least of the many treasures in the Underworld. Not only are they meager, but they are usually composed of relatively heavy objects, such as copper pieces or perhaps sacks of grain. Deeper levels hold greater danger, but also contain greater treasures.
Therefore it is up to the several players to decide what level of risk/reward they wish to pursue. The greater danger guards greater rewards, and therefore the depth below ground (or similar distance) guards faster advancement in terms of XP.
Likewise, there ought to be a simple way for the several players to know how dangerous the Wilderlands can become. One simple way is to say that the hex that contains a town is Civilized and within it, dangers will be those of civilization. Things will be "normal." Two hexes hence will be the weird Borderlands, where dangers of a wild and sometimes magical nature may reside. Past that is true Wilderlands where one must be prepared for anything, because it's impossible to say what is out there.
In any case, keeping that relationship between distance, risk, and reward is how the Referee keeps encounters balanced. Let this be your lesson: If the Referee does it well enough, the players will trust him and the table will have more fun, and play together longer.