It seems, RTW 2 has a built-in mechanism that prevents AI's from forming larger states and it seems that no patch can fix this.
The devil lies with the current army limit system. Take the example of a 6-region AI nation. How many armies it can field? It depends on the value of the regions controlled as their value will affect the imperium, but the range is 3 to 6 armies.
Now, look at the scenario where the same area (6 regions) is controlled by 6 separate AI's? How many armies can they field? 6 x 3 = 18 (not counting fleets)!... So, 6 one-region AI's have military advantage of 6 to 3 times over a single AI nation controlling 6 regions. This ratio quickly grows worse in case the "bigger" AI grows even bigger.
One might say that the one-region minors cannot afford 3 armies. Actually, at least on harder campaign difficulties, they can. So, this is probably the main reason why we see no AI grow larger than a few regions. At least, the ones who do grow larger, do not stay large for long. They just get swamped by a swarm of minor AI's. As the formerly small AI's grow, the cycle repeats.
I wonder if anyone has seen any different on lower campaign difficulties. Theoretically, if the AI is not getting the harder difficulty cash bonuses, the smaller nations might not be able to afford their 3 stack allowance. This might give some advantage to larger, economically better suited AI's.
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