The green dragons that terrorize the Elderwood rarely cross the river; the stone castles along the borderland that face the river are built to withstand acid, and poison gas, and the men that guard those walls cut back the brush for 100 yards or more, to provide clear lines of fire for the massive ballistae that face across at the Elderwood. At least once a year, a caravan tries to traverse the desolation of the dragons, and it goes heavily armed, with a column of sturdy knights and dozens of mercenary archers along each flank. Even so, it's a risky business, guiding caravans across the wilds.
You shouldn't be asking the question, "Are things in the game balanced for the player characters?" The world doesn't give a flip about the player characters or their level. A better question is, "Is the world balanced to itself?" Is there a reason the ogres haven't eaten all the orcs in the nearby forest, or the people are able to live in the valley while the giants live in the mountains? Why do kobolds live on dungeon level 1, and the hobgoblins live on dungeon level 2? Have you ever looked at the "number appearing" on any wilderness charts in the early editions of D&D? The wilds are a dangerous place, and the only way to survive out there is to go big or go home.
When running an old-school D&D game, the DM's job is not to provide fair, balanced encounters for the players. The player characters are not precious and unique snowflakes. The job is to provide a coherent setting, an impartial setting, and give enough information for the players to make their own decisions. It's not my fault if a 1st level party ignores the warnings, crosses the river into the desolation of the Elderwood, and gets promptly eaten by the green dragons that terrorize the place. They should have listened to that old geezer at the tavern.
If your game world features a megadungon, then that place represents a bizarre underworld that follows different logic than the surface world, but it is consistent to itself, and it too holds your player characters in little regard. It's up to them to gauge the amount of danger they can handle, not you. In the underworld, monster encounters are loosely equal to other monsters also inhabiting the same dungeon level as themselves. Your guess is as good as mine why it works out that way. I suppose they're drawn to the deeps by the lure of treasure, but settle to an appropriate depth where they can survive and still hoard the most wealth. It's why the underworld is such a strange place - the dungeon levels. But it's not your job to fully explain it, either; make it coherent, so it follows its own internal logic, and then let the players figure it out from there. Whatever you do, don't balance it down to their level of incompetence.
This is going to be my true test for 5th Edition, whenever we're able to see enough of the system to evaluate it - can it be used to create a coherent fantasy world? If we're back to minions and solos and monsters that change roles and games stats in relation to the player characters, the answer, not surprisingly, will be no.