Of course you are in no way shape or form required to use this system. You can assign AI objectives from corps upwards. So you could say in 1941 assign a theatre HQ to look after France for you while you focus on the eastern front. Then in 1942 give the AI control of Army group North and Centre while you focus in on the southern part of the front. It is entirely up to you how much or how little you use this feature.
Does this mean the ai can fight the war all over allone and i can just sit back and look how the war is going on?