Well, there are different kinds of undead. the longdead and soulless variation are just a form of chaff. Chaff is a term used by most players here to indicate cheap inexpensive units that sit between your mages/archer/long range killers and the heavy close combat stuff of the enemy. There are also undead such as the banes, wights, or liches, but those are heavy combat troops, and casters resp. I will not mention those.
A constant problem with normal chaff is low morale, hit it a few times, and they turn tail and run. (And if you kill 75% of all troops everybody runs). Undead have morale 50. And will never run. So that is great. And in large enough groups they will eventually hit normal other troops (who get fat, another bonus of undead, they don't get fat from combat) kill them and force the other side to take morale checks. And while this is happening your death 2+ mage is just quietly casting away. Never in harms way. (This trick also works vs some SC's, if they can only kill 2 troops each turn, a high death caster with some reinvig can keep them busy until the turn limit).
So a high death mage can skelly spam vs a lot of different types of pd. (you need some sort of arrow guard, but you can bring those along). Which is fairly cheap. You only need a mage and some troops to guard him (or few shields on the mage). Lets say you take LA ctis, a 240g sauromancer (d3+) and 10 heavy infantery to guard him will provide a nice way to start a attack force.
Now lets see what you need to counter it. One priest to banish the undead will not be enough. You will probably need at least 5 priests. To counter one d3+ caster. 250 gold. Sure that is cheaper than the 340 gold for the sauromancer and guards. But you also need to build the temples for the priests, and you need either 5 tempels, or 5 turns. While the ctis player can recruit one sauromander each turn. And which is more useful? One high level magepriest? Or 5 normal indy priests? So, the dead spam mages have more uses than the counter. (so when you invest in a gazillion indy priests, the dead spammer has already switched to his next strategy. Or use troops who can withstand a few banish attempts, lets say, normal slingers
). And your countertactic doesn't scale. He can beat your indy spam by getting more mages, as the creation of one fort forces you to get another 5 sources of indy priests each turn.
And if you pick your native priests it gets even worse, these are either more expensive in gold. Or are very cheap, and tie up a fort for a turn. Sure those 200 gold h3 priests can kill raise dead spam real quick. But a h3 priest cannot research, nor provide other forms of support. So you might win a few battles but in the end you might lose the war.
Or at least, that is how I assume it works, never really used dead spam competitively.