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Maybe keep a single settlement if you need the boosts they give(such as in the heartland of the empire where you have 5 hostile provinces adjacent to the one you occupied).
The vassal income you get is a nice bonus since you get zero Favor/gold from the settlements yourself.
Oh, and ALWAYS keep the dark fortresses yourself. Vassalize everything that isn't a dark fortress.
As for the vassals, IMO the coolest thing is that you can take direct control of their armies(not lead by primary leader), which is great for coordinated warfare. The "please attack this army/location" commands rarely work, so it's better to take direct control.
Painting the map is worthless as a warriors of chaos, which is a great design choice in my opinion.
for example iron will improve the armor of all your chaos warriors and chosen
no point giving something so precious away for some vassal
Chosen don't currently benefit from iron. My rank 9 chosen have 172 armor in Valkia's army, but the Warriors of Khorne have 202, which makes Chosen a downgrade in terms of damage soaking, but an upgrade in terms of damage dealing density.
Skullcrushers are also like that, in that they miss out on key buffs that are available to their predecessor unit (Chaos knights get magical attacks through tech that skullcrushers don't inherit, and skullcrushers don't benefit from exotic animals or the Blood Greed Chaos gift)
I don't know if any of that is intentional, but Skullcrushers are a downgrade from Lance Knights in my campaign, and Chosen are a sidegrade.
Outside of that, occupying is only for the replenishment. Giving your settlements to your vassals are a good option.
Be sure to keep an eye on corruption as Khorne corruption is a big benefit for replenishment and warband recruitment, so make sure to use commandments or own a settlement in contested regions.
Moreover, remember to ONLY VASSALISE non-order factions, or your military allies will declare war on you, by proxy. (No Bretonnia, No Empire, Def no High Elves, No Dwarfs etc)
The best way to keep your vassals and allies in line, is to make sure they either can easily become friends or at the very least have common enemies. (Norsca, Beastmen, Dark Elves, WoC, Greenskins, Vampires etc)
Other than that Valkia is a super fun campaign, just make sure to only discover factions when you're ready to fight them.
If a minor settlement or provincial capitol that ISNT a DF has a resource that is useful (iron is goated for khorn stabby boys) keep it. Otherwise, if you're vassals are close enough. Just raze everything to the dust and let them occupy it all behind you. If not, sack/raze or occupy and hold it til you can gift it to a norscan vassal.
You can also get things like 25% more ammo on marauder horsemen from wood, and I forget which one but one of the resources gives like 10% missile strength for them, but I don't think those are worth it especially as khorne where your marauder horsemen's biggest bonus is they're actually pretty good in melee. I don't remember most of the rest, but that's because I found them not that significant (I think its diamonds that's like 5% more income from buildings, and its probably marble for like -5% factionwide construction costs or something along those lines. I don't think they're worth because they're like 3000 which is gonna take a long time to pay off).
Everything else, imo you should occupy, then sell it to your vassal, or gift directly if you have the option. The norscan vassals in my experience never amount to much, so its probably best to occupy and then sell to them because their money doesn't matter, but I usually don't bother. If you get a vassal other than norsca, they're often much more useful (especially skaven, because the ai can't ♥♥♥♥ up skaven economy since every building gives income. If you gift skaven enough settlements they actually will become powerful, even if they just spam skavenslaves they're at least somewhat useful. Idk about dark elves though, if the ai actually builds their income building they're likely better)
I tend to give settlements to one or two norscan vassals primarily, they don't do much but whatever. Gets to the point where khorne armies just roflstomp anyways lol. Good hp on the units, lots of armor. Pottery gives +5% favour from buildings faction wide so pottery is a nice one to scoop up.
-Bash nearby tribe.
-Get a big ball of Marauders, or whatever better units may become available, as soon as possible.
-Upgrade all your Undivided units into Khorne units.
-Every turn, have a battle, specially against large armies.
-Always give every settlement to allied tribes.
-Go for unlocking Chosen and Chaos Knights as priority.
-By turn 20 you will be stable, with a falling Economy, but piles of Gold from all the combat and pillaging.
-You need no more than 2 Armies.
-Territory control is an illusion, you need only to keep killing, until you become unstoppable.