• We have updated our Community Code of Conduct. Please read through the new rules for the forum that are an integral part of Paradox Interactive’s User Agreement.
Why: Because you want to stop the HRE forming, or weaken a country that is an habitual emperor. When you can't become Emperor yourself (wrong government (republic for example), wrong religion). Because it's cool.

How: Occupy the capital of (ie you are currently at war and control their capital) or vassalise every elector. Occupy the capital of the Emperor. Choose the option from the HRE screen.
 
Why and how would dismantle HRE.

To dismantle the HRE, you need to occupy or vassalize all the electors, and then occupy the emporer's capital. Then, the option appears on the HRE window.

As to why you would do it, maybe you are sick of gigantic Austria coming to the aid of all the German OPMs that you are looking to annex.
 
I've noticed that AI expansion slows down to a trickle when I am emperor and superior in military and economic power. Which makes sense, from a self-preservation pov, but it makes it even easier and boring for me: Ai is paralysed and I get to pick my battles. So while I use the HRE and Emperorship in the beginning of the game, after 50/100 years I leave it. I do wonder what'd happen if I dismantled it. Is this possible when you are the emperor in DW?
 
It is beneficial to dismantle the HRE if given the chance. If the AI manages to pass all of the reforms they can form the HRE, and absorb all of the member states. The last thing you need is a massive blob to appear in central Europe under one flag, especially if you're one of the other European blobs (Spain, Italy, France, UK, Russia). The last thing any of these nations wanted was a unified HRE.
 
Remember one day, playing Spain, one of my allies called me for a war : Bohemia wanted to vassalized (as the last stage before HRE)...
Unfortunately for Bohemia, all the HRE countries refused that vassalization and was in war with all little germanic states... they all one after another obtained white peace and so went out of HRE, but I didn't accept peace (I was not member of HRE after all) and went forward until I arrived in Bohemia... and I annexed it... Bye bye HRE

(if I remember well, it was my first game with HTTT)