I have logged over 400 hours on the Sims 3 and Sims 2 in my entire life. I absolutely love that game, and I wish I had it on Steam so I could share a true hearted review of that.
The Sims Medieval is somewhere between the two games and it also stands on its own. The Sims don't vanish into rabbit holes (most of the time) but the character creation reminds me more of the Sims 2 then anything else. You play a rather large group of sims, never all at the same time, but sometimes you do play a chunk of them at the same time sometimes. You are a Monarch, Bard, Blacksmith, two religous leaders, Knight, Doctor, Wizard and Spy. All made to fit YOUR NEEDS. Your monarch can be a grumpy stick in the mod, or something akin to a court jestor. You want the Spy and Wizard to get married and have babies? You can totally do that as well.
I thought the game was going to be a homage to the Sims 2, if anything... But I was wrong. Its different. It stands on its own two legs as a fun game thats quest driven. Before you start the game you pick what quest you want to do. Fight off invanding frogs, find a genie, locate a missing child, whatever you want to do really. Each quest effects how other countries see you and how your citizens act around the kingdom. A country with high intellgience is more likely to be invaded by war mongering countries. A country with high defense is more likely to attract some unsavory characters who think they will be safe there.
Depending on YOUR actions the kingdom gets shaped and molded.