Actually, I've found that the German States at least have VERY active armies.
In my UP campaign, Westphalia and Austria have been at war pretty much since the start of the game. Westphillia has annexed most of the other German states besides Hannover and Saxony, and I gave them France because Savoy (who I gave it to before, because nobody else wanted it or would pay me for it :\) back stabbed me.
Now The Westphalians are actually fighting a very active war with the Austrians. Provinces are changing hands with regularity and there's been several major battles. It's a stalemate, though, which would seem kind of odd, but for some reason the minor factions seem to have better strategic/tactical AI than the majors, even the landlocked ones like Austria and Prussia.
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