There's a line of traits called GoodPrincess in the files. It has 4 levels; each adds +1 charm. It looks like successful diplomacy (concluding an agreement) adds 1 level of trait every time. However, at least the first two levels and possibly the third get lost just by having one single failure. Most of the time it's not bad; I just trade maps with other factions. However, I've had people reject agreements for ridiculous reasons, or rather no discernable reasons, and lose all the diplomacy skill gained to that point. I got one princess to 4 charm, and married her off to my new leading general who was at loyalty 4. He got both the "Wife is Fair" and "Wife is Popular" traits with the wedding, increasing both public order and the chance of having children.