Navigating between towns, caves, and various other landmarks in the game requires player(s) to move across an 8x8 grid of "Monster Zones" that can be seen from the wiki Main Page. If you are traveling into an undiscovered 'black' square, there will be a 100% chance of a monster encounter; otherwise each zone crossed represents a 50% chance that a battle will be triggered.
In the event of a battle, a random number and grouping of monsters will be selected from that monster zone. These encounters are not scaled based on party size, level, or any other factor. There is also a small chance that the player(s) or monsters may get an ambush and have one free round of attacks at the start of the fight.
Each quest (barring quests such as the Archaeologist where exploration is the main focus) has a set number of battles assigned to it that players must overcome to meet the quest objective. Monster encounters during a quest are scaled first and foremost based on location, meaning that a high-level player taking a Brecconary quest will have a considerably easier time while a low-level player that managed to make it to Rimuldar or Cantlin will still have a difficult -- if not fatal -- quest awaiting them. In addition, quest encounters are also scaled based on party size, quest type, and possibly other considerations as well. Ambushes on either side will not happen randomly, but instead may occur based on the GM's discretion.