How are difficulties different?

There are 3 difficulties to choose from. What are the differences between them? Are some things only unlock-able on harder difficulties or can you unlock everything on easy?

Solution 1:

• Monsters have more health. They also appear to be more intelligent and aggressive on hero mode. They also do a boatload more damage (lizalfos hit for something in the ballpark of 7 hearts on hero mode, not sure about hard or easy).

• Once you beat the game, you'll see that there are skulltulas that are only available on hard, for example.

• Reward-wise, higher difficulties provide more rupees on a victory, as well as better items.

I have no observations on friendly troops yet.