The point is, however, that even if their actual territories are dictated to them via the Elder Council, they're going to ferociously fight over whatever they possibly can, through whatever avenues they possibly can. Whether those avenues are through bitter lobbying of the Elder Council, or using less than ethical means to turn the political machinations, they're not all just going to sit pretty and be perfectly tranquil because they're close to the center of a governing body. If anything, the amount of political danger, tension, and complexity shares correlates with how close one is to the central bureaucracy.

In a system where territory is won and lost by warfare and intrigue perhaps, but the Counts of Cyrodiil have their territories governed by a higher government.

Historically, the Elder Council has long been a deciding factor within the outcome of certain events within the history of Tamriel. The first major exercise of their power came in the year 266 of the First Era, wherein it was the Elder Council who appointed Belharza the Man-Bull as the second Emperor of Cyrodiil.
The Elder Council continued it's hold of power throughout Belharza's reign and to Pelagius II's in the Third Era, who dismissed his power-hungry and wealthy Elder Council, allowing only those who aided his repayment of debts - acquired through the Empire's mismanagement by Emperor Uriel Septim II - to reassume their positions.
The reformed Elder Council went on to suffer through the reign of Pelagius III, oft known as "Pelagius the Mad", struggling to maintain a working Empire and stifle his embarrassing conduct. Having endured Pelagius' insanity for years - see The Madness of Pelagius for further information - the Elder Council sent him to an unknown asylum for rehabilitation, electing his wife, Katariah, as Regent Empress.
Following Katariah's death, Uriel Lariat - borne of Katariah and her Imperial consort - assumed the title of Emperor and the name of Uriel IV, overriding the Elder Council's wishes that he not do so. Over the period of his forty-three year reign - as acknowledged by the Elder Council - the members of the Council, separately and as a unified group, made numerous attempts to depose him from the throne.
Ultimately, the rule of Uriel IV was one bespeckled with fruitless efforts and failed ventures, due to the Elder Council's constant interference. Following his death, the Elder Council enjoyed their final triumph, disinheriting his son, Andorak, of the Imperial throne by a unanimous vote, electing in his place a cousin proclaimed as Cephorus II.
Enjoying great power after Katariah's death, and through numerous Emperor's, the members of the Elder Council were eventually brought to heel by Emperor Uriel VI, who was able to decrease their influence through use of "bullying" tactics. Employing an elaborate network of spies, Uriel VI was able to blackmail, and otherwise coerce, the members of the Council to cease their manipulation of him and the Empire as a whole. Furthermore, Uriel VI made frequent use of his right to veto against the Elder Council, styming their efforts wherever possible. So impressive was his vendetta against the Council that the Sage Ugaridge was recorded as having said that "Uriel V conquered Esroniet, but Uriel VI conquered the Elder Council."

And they don't have the manpower to do any warring or expansion, they just have guard garrisons.

We don't know how long the borders have been defined. It's possible that the borders aren't subject to change anymore. Kvatch wasn't dissolved into anoyther county's territory when the Camoran Usurper hit it.

they're going to ferociously fight over whatever they possibly can, through whatever avenues they possibly can.

A 'higher government' that has probably lost much of its repute, thanks to the fact that it is public knowledge that the Septim line has ended. Plus, I would think that Imperial generals would become more involved in regional politics, to fill in the power vacuum created by the lack of an emperor. Not to mention the Blades, who owe their loyalty to the Emperor, not neccesarily to the Elder Council. The Elder Council does not have direct control over the Imperial Legion and Navy, but has to rely on generals. How many generals would go from following a long established line of emperors (started by Tiber Septim, who is revered as a god) to following an unelected council of aristocrats. I think generals would be more apt to rebel and make themselves (or someone they like) emperor.

Fighter's Guild or Blackwood Company? Not to mention the Dark Brotherhood. The counts/countesses do have money you know.

Leyawiin/Elsweyr territory dispute? I'd say they're pretty mutable. And besides,

Yeah it is kinda disappointing to see like 40 empty chairs in that huge room. There could of been loads of quests about doing errands for politicians and possibly becoming one yourself

That's a dispute between provinces, not a dispute between counties within a province.

Point being? Two sides claim rights to a chunk of land, take their case to the Elder Council, and a resoltion is attained. If it can happen on a province-wide scale, it can happen on a county-wide scale. Further, you think Marius Caro just sat idly by, twiddling his thumbs while the Elder Council debated whether or not to transfer half of his county over to Elsweyr? You can bet there were some open appeals, some backdoor deals, or a little bit of both going on.

And besides, we're getting way too hung up on territory grabbing and feudal-esque nonsense. There's a lot more to this inter-squabbling politics pie than that.
-Disputes over trade routes or inter-city economic concerns
-Fighting over Imperial funding
-Securing political alliances via social functions (like marriage, for example)
-Infiltrating rival courts to gain information to better contest other cities for Elder Council favor
-Backdoor dealings with other courts for personal or political motivations
-Dealing with matters of impugned honor
-Etc, etc, etc.

I think the territory belonged to Elseweyr originally, the Empire decided to absorb it into County Leyawiin. After that, I don't think Count Caro thinks the Elder Council even remembers Leyawiin exists.

I don't think we're in much of a position to see it firsthand though, as cool as it would be.

Why? Because of the crisis? If the guilds and factions of Cyrodiil can operate business-as-usual, then so can its nobles. It's no time like a crisis to think of bettering oneself at the expense of others.

No, because we're not one of their underlings. The Great Houses may have relied on mercenaries for some things, but most political intrigue was carried out in secret by trusted underlings belonging to their House. Or by hired assassins, in which case the person sent to carry out the assassination usually wouldn't even know who bought their services.

The Fighters Guild has a charter. They defy it, they'll lose the charter. Blackwood Company could probably provide military service, but not enough to fight a land war.

But I think to assume that perfect secrecy would always be attained, heck even be attained most of the time is naive. Mistakes will be made, people will talk, and stuff will happen, just like in the real world. Tamriel may be set in a fantasy world, but that doesn't mean people behave that much differently than the real world.

But the Counts/Countesses could conscript/recruit an army of their own citizenry to supplement a mercenary/guard force. Also, given the destruction of Kvatch what makes you think they wouldn't be interested in expanding. The strong pray upon the weak, and since Kvatch is without a Count and weak, why wouldn't they try to get some of its resources?

No, because we're not one of their underlings. The Great Houses may have relied on mercenaries for some things, but most political intrigue was carried out in secret by trusted underlings belonging to their House. Or by hired assassins, in which case the person sent to carry out the assassination usually wouldn't even know who bought their services.

Well, there are some bits that can be uncovered. Count Indarys's wife was murdered, and Count Indarys is the main suspect. Count Caro married the daughter of the Countess of Chorrol, who promptly tortures prisoners. Count Terentius seems to turn a blind eye towards skooma, since his own son is addicted. And Count Hassildor is secretly a vampire.

snip

I don't think they'd try to openly take over Kvatch, for two reasons. First, it's be open rebellion. There's not yet enough assurance that the Legions won't be able to put them down to warrant it. Second, each city has it's own Count; if anything, they would try to get one of their relatives or offspring to be the new Count of Kvatch.

So because we do not start the game working for them, we can never work for them?
By that logic, since we do not start the game in the employ of the Dark Brotherhood, we can never be in the employ of the Dark Brotherhood.

There wouldn't be much opportunity for advancement in such an employ, it'd be like one of the dead-end factions like the Order of the White Stallion or the Order of the Sacred Blood.

And they probably hire out of their court, not some intrepid adventurers.

That's purely an assumption; steady work for the nobility could result in several quest chains with unique outcomes based on the different count/countesses interacted with. Advancement could mean anything from getting special benefits in cities one serves, becoming a right-hand man to a count or countess, or even becoming nobility by suasion of the Elder Council and the influence of a patron.

For some of the more delicate objectives, hiring out of the court would be suicide. If I'm going to send someone to infiltrate or gather information about another count, or I'm going to send someone to do some dirty work, or if I'm going to send someone to handle a delicate matter in which my name probably shouldn't be involved, then picking someone from my very own court would be a dead giveaway. Besides, as the player becomes more powerful, more of a prospective asset, then their ability begins to outstrip that of a court.

And that's neglecting the further interesting plot hooks that could have resulted from a court that can't be trusted or a court that's full of sycophants.

[snip]
Putting these plot hooks within the boundaries of exploration only to let them trail off to nothing is bad design and a hallmark of not properly budgeting time.

and just for the record, I'd rather a game be completed on time, than worked on long after deadline. In the end, it's keeping good peoples' jobs that matters more than a just illusive, badasser's story.

but yeah, must've been bad time management. Such a game is not beyond Besthesda to make.

It isn't a Great House, there wouldn't be much to do. They aren't waging private war against each other, they're probably doing little more than spying on each other and contemplating possible alliances if the government falls apart. At least for the moment.

They wouldn't hire someone unless they can trust that the person in question is loyal to them and can be trusted not to betray their trust. Or if they're from a reliable and discreet service that doesn't ask questions.

and just for the record, I'd rather a game be completed on time, than worked on long after deadline. In the end, it's keeping good peoples' jobs that matters more than a just illusive, badasser's story.

but yeah, must've been bad time management. Such a game is not beyond Besthesda to make.

I never thought of the deadline relating to employment before. You work in the games industry? Or just have experiences with deadlines?