The flip side is that every nation is kept busy. As Bellam and the BC, I started with two provinces, as a vassal to Aerenwe, one of the smallest kingdoms around, and Roesone, a nice stable kingdom. It should have been a cakewalk to remain as I was, and almost impossible to go anywhere, thanks to my small size.
Instead, I found myself as the cross-roads between four warring kingdoms, with some substantial (and only partly publicly known, even after some revelations near the end of the game) internal decisions and opportunities. By the end, I'd lost half my lands, gained twice as many, changed sides in the largest war the region had seen in years, and become involved in banishing several of the Lost from Anuire forever. I'd also gone from a diffuse guild spread across 5 kingdoms to one with virtually no holdings outside of Osoerde, but poised to become virtually the only guild in the kingdom. I was also the second most powerful regent in Osoerde, hated by almost the entire rest of the southeast, and was allied with multiple temples in a spitting contest with Archduke Osoer. It was exciting as hell the entire way through, and never once did I have half as many actions as I needed to do everything I wanted (not that I had the gold to do that many, either - I may never forget the turn I opened the P&H and discovered that I had an income of 2 GB and a projected expenses of 16. I almost wept!)
Large or small, every kingdom in that game was kept hopping and had opportunities to be utterly destroyed or uplifted to glory. That, more than anything, was what impressed me most about it.