I agree and disagree. What is important is that every single player game is different. I don't want every new game to turn into this or that faction dominating. Or Vlandia being always the first faction to get wiped. What is important is that the factions are balanced at the game's outset FOR THE AI regardless of the player. 50 hours in that balance might be completely thrown out of course, but how the maps look in 50 hours should be very different by play through. That is what balance means to me.
Now balance for the player can be a completely different monster. Maybe in one area of the map there are minor factions that hate any new clan that tries to move in and relentlessly pursues you or damages your financial interests until you join a faction and get that protection, while in another there are minor faction that actively seek to trade with someone like you and pays well for mercenary services. This kind of imbalance is fine because the game is different depending on who you interact with and how you play, some places might be harder to make your base than others. However the AI factions need to be balanced against one another at the start to ensure game variety.
There are so many ways to balance the AI factions rather than just by number of fiefs and lords each has. For example:
1. Smaller kingdoms being less of a threat are much more likely to be on good diplomacy standings, less likely to be at war, more likely to be in trade deals to get wealthier.
2. Smaller kingdoms can also have castles/cities that are much better defended where you'd need 5x as many troops than average to take their fiefs. Imagine a castle on a hill surrounded by a moat with multiple guard towers each armed with elite archers and artillery and only 1 viable entry defended by elite infantry with archers supporting them on both sides.
3. Be given very powerful lords with very unique elite units and equipment that'll make them able to take on 2-3 ordinary lord armies each. Some smaller factions may also have very wealthy lords with armies much larger and higher quality on average than others.
4. Give unique faction mechanics:
a. There can be a minor merchant faction that's on good terms with most of the kingdom and very wealthy trading with 5/6 major kingdoms. If war occurs it has unique ability to recruit strong mercenary armies that are temporary but can be quickly assembled.
b. A religious minor faction may not have to pay income to troops and have much superior recruiting bonus in their prophet's armies.
c. A pirate minor faction may have fiefs far away from the other factions with a strong navy, making it less likely to be invaded while much stronger against any faction forced to sail to reach them.
d. A barbarian minor faction may have a unique rage mechanic where it's armies are much stronger the longer the battle/war with units recovering and doing more damage/attack speed in a rage after losing allied troops in battle.
5. Make larger factions harder to maintain. Where the larger factions could be balanced by constantly being at war on multiple fronts, internal political struggles with lords defecting to join other factions, coming together to create their own minor faction sometimes, or trying to take control from within.
6. Give larger factions bad terrain starts yielding less income/production, with easy fiefs to conquer.
7. Some Larger factions can have a much higher percentage of peasant soldiers. Mongolia and Japan were able to take over China which is much larger in population and landmass due to organized superior forces against unorganized peasant ones.
8. Smaller factions can also be strategically placed where they are surrounded by allies with potential enemy factions too far away to effectively wage war.
In any case I would be happy with a 70/30 balance between any two factions where one faction has a 70% chance to beat another one in any play though. Trying to make every faction equal in strength, number of fiefs, and lords they have as well as excluding minor factions from owning fiefs is unrealistic, boring, and lacks creativity.