How i see the system working is you can either vassle a existing country that has a bad economy or no millitary through diplomacy or after you anex a country you can revive them as a vassle
With this you can dimand teratory from the vassle or money
The way it would work is that they will permanently have 100% diplomacy and they would copy your Ideology and economy you can control there military under your comand and they could be set to an ai that would help you in invading and defend its own territory with this you can take trops from your vassle but no more then 30% of its total military