I've gotten up to 7 towns in the past. I haven't done poorly in my current game, but its been a bit weird. I'm with the Southern Empire. I was first granted Jogurys Castle. Then in the next war I took Syratos Castle, thinking they would give that to me. Nope. Gave it to Vettranis. Then I took Amprela and they gave it to me (I'd rather have the town anyways). Next war I took Vetranis, thinking they'd give it to me...nope, to Vetranis. Then I took Argoron, which they gave to me. Then I took Atrion Castle, which they gave to Avlonos. Since I've been the only one with a holding next to any of these after Jogurys, I'm surprised I didn't get any of the castles, in fact, I never had more than a 0% and wasn't even on the list at times. The towns are what I want, so I'm not really disappointed, but I am baffled that I'm pretty much not even considered for every other holding when I'm the one next to them.
The next war I took Sibir & Varnovopal, which weren't next to anyone. Both of these were given to Avlonos, which is disappointing. I thought I'd at least end up with one of them. We have nothing next to either. Although if the AI could actually do anything we would have taken Vladiv Castle before I took either.