Diplomacy doesn't mean much in any Total War game I've ever played, since the AI just can't handle it.
It does mean that when you lose a battle far from home, but near your ally's lands, your troops have somewhere to retreat to, and not just disappear. And it does mean that occasionally you can get an ally to join you on the battlefield (where they will screw up your plans, but never mind).
Those who are particularly scheming about it can use allies as cannon fodder while stealing the city they were besieging from under their noses. But who would do such a thing?
Actually, I always did find it ridiculous that when a country is allied to two countries who go to war against one another, they will ALWAYS remain allied to the aggressor. Regardless of how precarious a position this puts them in.
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