I imagine it is something like this:It's great but what is the difference between create puppet and liberate country?
Liberate: Allies overrun the occupied lowlands, Belgium and the Netherlands can now be released (liberated) and will exist as fully independent countries (possibly allied)
Puppet: A german player overruns the Ukraine and decides to create a puppet regime there. Technically an independent country but with obligations to germany. e.g. deliveries of raw materials, cheaper trade and no or little freedom to make its own policies.