actually, i haven't noticed the npcs attacking monsters very much, even when they wander about in their towns.  And for the most part, monsters only attack my trade wagons and pioneers - they rarely attack my other units or settlements (although they do, occasionally)

Because they signed an evil treaty against YOU !

Well, I know I've seen a 'Faction X has been destroyed by monsters' message early in the game. Whether this is just because they foolishly attacked a monster stack before building their first city or not I don't know.

Actually it doesn't seem like the monsters attack the player either unless you start to get ahead. I never see monster attacks until I've annexed the first other faction, after I've doubled sized, all the monsters seem to get magically attracted to my cities. It could be that AIs are rarely ahead enough to become a monster target.

Thats not the point I made as I said I know NPCs attack monsters, but why dont the monsters attack the NPC's and thier cities.

It will almost certainly be because an NPC soveriegn attacks a monster stack and dies but it will not be because the monsters attacked the NPC and that was my point why dont the monsters attack the NPC soveriengs and thier cities when they DO attack mine.

As it stands we have to spend a concerted time and effort fighting monsters attacking us that the NPC sovereigns and thier cities do not.

I know this isnt true, I've had my sovereign attacked in the first 20 turns before in the wilds and I've also had my first city taken by monsters without any defends by about turn 8.

I have been attacked by monsters quite a lot... And also, what was really bad: It seems when monsters attack and destroy a shrine, the elemental shard is gone! I have had happen multiple times this playthrough that old forest or ancient libraries lost their structure, so I had to kill the monster and build it again. Annoying, but ok.

But it seems when an elemental shard building is destroyed it's just completely gone Darned! Is this intended?

I think right now the monsters move randomly in the early part of the game. I don't think they do a check to see if the target square is occupied, So if you are wandering along with your sovereign/army on a square they want to move to, you get attacked. 

Monsters need to have a more diversitive faction.

Instead of whatever it is (Raiders & Monsters) should be (Giants)(Insectoids)(Pirates)(Bandits)(Dragon Kin)(Darklings)(Ect) for Immersion and interesting game play. I also want a Taming Skill =D