OK, so I know a lot of people are complaining about AI who do nothing.  This is made more confusing by the fact that half the time the AI that is doing nothing is Minor nations.  Thus it gives the impression of doing nothing.

Now the big issue I've noticed is that sometimes even when I tell the game to create a new one with all the other Kingdoms and Empires included, about half the time they still spawn with only one Major Faction and the rest minor, therefor perpetuating the passive AI thing.

I've noticed this tends to happen when I am creating a new game after my first on any given full install and don't physically remove EVERY faction from the thing in the middle where it shows what ones you're playing against.  OF course you can't remove one, which means after 8 of them get removed, you need to put one back in and THEN remove the one that wasn't removed in the first swath, and only then is it a lot more likely they'll all spawn as Major factions but for the one empty slot.  (Seriously, cannot wait for faction creator and ability to add more factions!  9 is not enough!)

Admittedly, even this doesn't always fix the issue for me, at least on the machine I was using (Sadly, my gaming machine died the permanent death for other reasons, so now using a different computer and haven't gotten it reinstalled yet since the new patch, but have noticed a few random posts here and on other forums with similar complaints)

For settings I always used Epic Game length, a custom Sovereign, Normal difficulty all around, and the Largest world.  And so far haven't played any faction but Capitar.  Never bothered renaming world or anything.  Just took whatever random ones get assigned.

EDIT:  More info.  New computer, same issue.  And I don't think my remove and re-add stuff works either.  I'm starting to wonder if the only solution is to fully exit the game before starting a new game instead of going from main menu after an abortive game.