One arguement for developing all over the place is the speedy raising of troops. If you have the correct buildings in every province and a 'Battle Fund' of spare florins, in an emergency you can raise a large army in just one year (or 2 with huge units..) which leaves time to organise and counter whatever provoked you...

I am running a Danish campaign at the moment and am concentrating on keeping a relatively small number of provinces. I have a large trade network and lot of available cash to to upgrade my provinces.

But you have to specialise at some point, especially for the better troop types as the building they require can take an age to construct...