Currently, knights controls the difficulty (5 levels ranging from "very easy" to "very hard") by changing the thinking depth and the amount of memory that can be allocated. This is not enough since the engines are still way too strong for human players in the most cases.

There are couple of other options in the protocols that we can explore like the number of cores for the XBoard protocol and maybe similar options for UCI like "go infinite", "go depth" x (where x is a number) or "go movetime x" (where x is time in millseconds).

To allow/disallow thinking on opponent's time is also an option that can be used maybe.

The engine specific settings like for stockfish ( http://support.stockfishchess.org/kb/advanced-topics/engine-parameters) should also be considered to modify the strength of the engine.