To summarize your point, the argument is that in real history, factions never got destroyed...
But, for one, a lot of historical factions are represented by rebels, and they got destroyed in real history. For example, Burgundy was an independent faction represented by rebels in vanilla that was destroyed. Wales is also a faction represented by rebels that got destroyed. Another example are sweden and norway, which are also represented by rebels. These were united into the Kalmar union with Denmark.
The fact that some of the big factions like "France" never got destroyed is an unfair statement because those were not original unified factions, but was the result of destroying independent factions.
Second, there were big European super-states during the medieval period. For example Charles V's empire contained Spain, HRE, and Sicily.
Third, the game is not just about Europe. In actual history, the Turks conquered both the Byzantines and Egypt (the Mameluk sultanate).