I am not sure if I understand correctly: "it includes them" means, if you build the next level castle, you get the improvements for free with the castle upgrade?

Quote Originally Posted by Ludens
Building the next level of castle won't erase the additional defences, it includes them. In other words: if you build a fortress, it includes both the citadel upgrades (barbican and demi-culverin towers), whether or not you have built them before. This way you can get gunpowder castle defences even before gunpowder is invented! So, if you are going to upgrade you castle soon, don't bother building the upgrades. A possible exception is the motte (fort-level) because it gives you Vikings Landsmen in the regular MTW campaign (in Norway, Sweden and Denmark, if you have VI), gaining you a very good unit for a small upgrade.