Vassal Limit

The Vassal Limit is a soft cap on how many vassals a House can manage. This limit can be increased with a higher Administration score.

Codex
"There is a practical limit to the number of vassals that a house can directly manage before the administrative burden becomes too high. This is shown for your house in the bottom toolbar, to the right of your character's portrait. The limit is calculated based on your house's score in Administration.

When a house has too many vassals to manage, it becomes harder to keep those vassals honest in their tax tributes, resulting in a penalty to tax income. Similarly, the greater amount of effort that the head of the house must personally expend to support this administrative work results in an AP penalty for that head.

As your territory grows, it becomes practical to delegate control over parts of it to a single vassal. If your house is a great house, then you might want to give direct control of a system to one of your vassal leading houses, and let them deal with the administrative work. If your house is a leading house, then you might want to form a vassal faction from part of your territory. Of course, be wary of creating a powerful unruly vassal."