[Sombre]

This is what I use:

Paint Shop Pro for graphical editing.
Notepad for editing .dm files.

That's it. Seriously.

The first step to making your first mod is to have a skim throug the modding manual found in the docs folder in the dom3 install to see what's possible. Then start with a totally blank .dm file and fill in the bare minimum that you need to make the mod show up - the stuff right at the start of the modding manual. Then look at nation modding and select a nation which already exists in the game - change the name and the descriptions. Don't clear anything from the nation yet - this is just for practice.

Since you're working with a pre-existing nation you at least know that the mod is going to work and be playable - you can keep adding stuff in and eventually you can change a few bits of 'code' to make an entirely new nation. I suggest just making one or two new units which use sprites already in the game, maybe even stats already in the game (#copyspr and #copystats commands) just with some minor changes to their stats,... and then add them to the lineup of your 'replacement' nation's recruit screen,...

To be honest I think it's best to just stick to the mod manual as a reference, don't use any new graphics at first and look at what people have done in other .dm files to work out what you should be doing. Don't bee too ambitious until you know how to make weapons, armor, sites, monsters,.. maybe even spells. There's a lot you can do just by mixing and matching units already in the game. For example you could make a very simple mod with a big impact by making a new nation and giving it a recruiting lineup of all the heavy cavalry found in different vanilla nations.