If we're talking 18th century terms here, the smaller nation would almost invariably sue for peace, accept some form of protectorate status and move on.

With wars between larger states, things never went to the stage of one state being annihilated. Usually they fought until one side threw in the towel, some land and money changed hands and that was that. Next war enemies would be fighting on the same side.

While I don't argue that ETW should replicate 18th century politics and warfare perfectly, after all, some people just want to take over the world, there's something to be said for accepting peace when a state clearly not interested in taking over the world, but rather just looking to trade and maybe snag a few extra colonies, has performed the international equivalent of kicking your door down with a SWAT team, pinning your national leader to the ground and shoving a peace treaty in front of him.

I'll give you a hint. In that sort of situation, it's best not to respond with, "Sir, diplomatic niceties are the only thing saving you from a horse-whipping!"

That sort of talk gets you bayoneted.