“The Sacred Stones that defeated the Demon King radiate a constant and dazzling light. The Sacred Stones are the only power against the dark, the last hope of humanity. It is only natural that evil would seek to destroy the Sacred Stones... There can be no other force behind this attempt to gain the stones. A childhood friend appears before Eirika/Ephraim.”
Send a strong axe user, preferably Ross as a Berserker, across the river to the north where you start. Have him stay in either the woods or in the mountains near the two forts.
Send a strong magic user to take out the Mages and Sage in the island.
Have a flying unit go take out the heroes to the east of the start point. Preferably a flying unit that can use swords. (Cormag as a Wyvern Lord is probably the best choice due to his high strength and defense, along with decent avoid)
Have your unit with the highest avoid, probably Joshua or use a strong light magic user, to take out the druids near Lyon
Keep a healer near whoever is attacking Lyon. Try to use a unit that has enough avoid to dodge Lyon's attack instead of someone with high resistance, since they are usually magic users and Lyon has higher resistance than defense.
If you get his or any of your units health low enough, Lyon may switch to Nosferatu, making his Fenrir drop once you defeat him.
If you would like Nosferatu tomes, this level is the only place to buy them in the entire game (you cannot get it in this spot during Creature Campaign, although you can get it from chests in said mode). If you can, try buying them in bulk for later use.