The latest release in the Age of Empires line is Rise of Nations, also created by Microsoft. The graphics are better, there are more units, and there's a bit of Civilization and Pharoh thrown in.
Microsoft has been making these games for a while now and really brought together the best of many of them. Much of it is based on the Age of Empires system - build up your civilization, work through ages, build and grow. But they threw in better people-management a la Pharoh and Caesar. Instead of peasants standing around stupidly while farms wait for them, the workers actively seek out what needs to be done. They'll sign on at the lumber mill or farm where workers are needed.
Set up a university, and the building is quiet. Start creating scholars to study there, and you'll see them out front, taking their classes!
Of course there are opponents to deal with. You can of course build up a massive army and go wipe them out. But you can also try to set up diplomacy with them, or out-tech them.
The little touches throughout the game are just amazing. Build in an arctic area and there's snow on your roofs. The music in the backround really draws you into the mood. The controls are all very intuitive and easy to use.
Highly recommended - it's a game that really shows how amazing strategy gaming can be!
Buy Rise of Nations from Amazon.com