I honestly never thought that would be possible, the islands are pretty damn huge.
At first when realms had grow without penalty, all they have to do was move the capital city to the new conquered Duchy, but then it was forbidden, but still, we had the issue of realm having the ability to nearly take over a continent.
Then it was implemented the Distance-From-Capital penalty. After that, huge realms were at disadvantages, then they find a way to increase expansion with satellite realms, Conquer+Create, it happens in every continent, and until it becomes impossible to create a new realm for Expansion Purpose, it will always happens.
From an outside point of view everyone can see that Game Mechanics have been used well, but separating the Federation, will solve nothing, because the players of all these realm were at the beginning in the same realm, so it will happen again, and again with just a different banner.
I will repeat myself:
"Until it becomes impossible to create a new realm for Expansion Purpose, it will always happens"