I agree with you a little bit. The reason it doesn't play out this way IMO is a problem with the cost-benefit analysis. The current mechanics favour low density. For example, 'Realm A' with 12 nobles and 12 regions can have more gold, more food, more recruitment centres, and control more of the map than 'Realm B' with 12 nobles and 4 or 5 regions, and at no additional cost to Realm A. Also, the players behind Realm A will be more engaged because, as you pointed out, players do want to be more than knights.
I would disagree. There may be a slight return on gold, but if you spread too thin you cannot project power. If realm B is heavily invested in a profitable city and surrounding rurals, it has a defensive edge and can focus effort. Not to say there isn't an edge on gaining as many gold/food producing regions, but if you have to fight tooth and nail to keep an extra 30 gold per week...it isn't worth it. I'll avoid going into more detail, don't want to derail this into a BM military theory thread, but there is power in focused effort.
