I got the impression that the research on better heroes works something like researching relations with darklings and such - an exceptional hero is created in / near your cities. I would further guess that Rilis is one of those.
But that's guessing. Really.
As for the scattered towns - that's 'mior' factions - single towns and such. Some are led by very exceptional people.
These exceptional heroes or rulers would make good candidates for marriage, I believe, although I'm not sure how you can marry the ruler of a mior nation. If you want diplomacy with them, just right click on its sovereign when you stand as close as you can get. (WIthout declaring war).
I liked that town led by a dragon though. Too bad that's gone. 
The minor factions also make for decent(ish) convoy targets.
