Simple reason. It's easier to code it that way. I'll explain the more difficult alternative, but before that I'll say I'm sure most players already knew about this issue. It's so obvious and has been around since Warband.
The easiest alternative to omniscience would be to limit their knowledge by locality, like you proposed. This wouldn't really work because it'd still be omniscience, only smaller. Like Bluko mentioned, it will cause some problems such as AI not being to able to know to support faraway allies, etc. The next logical step would be to implement a messenger system. If you want the realistic ways, it would be to create small (1-3 riders) parties of messengers to run from a lord to another to deliver information, which can be intercepted by bandits, etc. However, this would burden the hardware too much, and there's a possibility that a scenario exists in which all messengers are intercepted (a horde of parties blocking a narrow path, etc). Okay, just make it messenger birds then. In that case the game doesn't need to create actual parties and just pretend lords are sending them around. Then you will realize that it's back to the currently-implemented system. They could improve the information system by taking into account the distance between a lord and another. Give a delay between the actual event and AI lords receiving info about that event. Will that do anything? Yes, but not much. I wouldn't be surprised if they already tried this and decided against it due to computation, stability, or gameplay reason. It may result in AI being too slow to actually achieve anything, for one.
mate - just like we get constant intel of allied armies and sieges they could get the same intel at the same style - I've even thrown in the "scouting" crap as in AI gathers intel from all realm parties as they travel through the map - but should remain oblivious to areas and fiefs which were never scouted. - for obvious reasons the scouting should be limited to vassal nobles while never working for mercenary clans (that because mercenaries join kingdoms at random over completely absurd positions in the map)
There's absolutely no reason not to do that other than pure laziness - any basic RTS has systems like that in place...
As an observation: having messengers intercepted by walls of parties is a strategy - if you make the AI more conservative and less of a muppet it would not try to besiege or raid a settlement on the other side of the planet. If it did it'd be punished - end of story.
The idea of having scouts makes for more tactical approach, and as such it could also be given as a choice for the player to send scouting parties beforehand to gather intel on possible targets - much like that ridiculously useless quest lords give us when they are fielding armies.
Now - can there be trouble for the scouts? Hell yes, and that's the entire purpose - intel plays a large part on wars, and if we're in a sandbox war simulator, the bare minimum would be to give the play pertinent strategical playing field for such - not the case in-game, and one of the major reasons why it's so boring and everybody complains...
The only correct answer for a really good medieval RTS sandbox in such a small map would be having some key elements to take into account as rules of a chess game:
Intel
Supply lines
Army speed
weather/season
communication
and strategical positioning.
currently we have: none of the above, not even political RTS at all - vassals are just mockups to inflate numbers and annoy you with random votes - but there's absolutely zero meaningful interactions with the player.
So the PC ends up in a situation where: we have no relationships in-game at all making the entire holster of NPCs utterly meaningless - AI has zero simulation of personality / ambitions / objectives other than endlessly fighting - even war declarations make no sense - just numbers of "you did this thing for X npc, here have some numbers to improve your other numbers" (like reducing defection chance, vassal recruitment chance, voting in your favor chance - it dies there) - there are no strategies involved on the campaign map at all, just fooling the AI because it's omnivision makes it predictable, and as such the best way to deal with it is to set-up deliberate traps like emptying a garrison and hiding in bushes - for the omniscience the AI has seems to revolve around fiefs, but not enemy armies - this means you can literally wipe all factions by placing a single trap fief with nearby woods and you're golden - hence repeat 50 times in roll, congrats you've "beaten" the game...
So, what am I really revindicating here is that they actually give us a game that demands at least some thinking. Not mindless repetitive single actions to achieve the same thing over and over and over again. AI must obey rules, but not pointlessly, rather so the game becomes more strategical - place the player under the same rules - this doesn't mean having the exact same tools or means to exist under the rules, but rather doing it effectively, not literally. - the same goes for every single aspect of the game - where are noble enterprises? Noble caravans? Where are the fallen landless nobles committing crimes they so proudly announced way back? I mean, we're basically playing with ourselves, quite literally, there's no real challenge other than mindless boring grind and eventual defeats during early game if we played wrong or went for the hardest possible challenge ill-prepared. That's why most ppl only enjoy up to mid-game - because once you are past that pt (forming a kingdom / started conquering) it's just "wax on wax off" until the entire map's monochromatic...
