The Encampment allows you to have a certain number of commanders, that you can use for attacks, to send support, move troops & tools between castle,  outposts, resource villages or sending a capture. Basically, any action in the game that troops & tools are involved needs a commander (for some actions it is best to have a special commander, that we build specifically for that task). Having more commanders allows more simultaneous attacks (or other actions).  You can build only 1 encampment at  "The Great Empire" castle. When maxed to level 12 it can hold 35 commanders. It is good to know that it will not burn in case of attack (or sabotage) if it is level 8 and up. The first 7 levels could be built with wood & stone while further levels requires "Construction" & "Upgrade" tokens.