
You can only hold so many landed titles before you start to incur penalties all over the place. they will become more and more important as the game goes on. Vassal Limits are important, if you go over this, you will incur tax and opinion penalties. These are the ones that affect Vassal Limit.
In usual terms, they hold a title beneath yours and are subservient to you.
Direct Vassal – These are Vassals directly controlled by their Liege. These will often demand landed titles and council seats. Powerful Vassal – Politically or militarily powerful Vassals that demand more of their Liege. Expect them to challenge you politically, or even declare war for independence. Strong Vassal – Vassals who are equal or close to the Liege in power. Knowing each of these and what to expect will help you in the long run Vassals come in a few different types, depending on their power and position.