Just got the game on friday spent all weekend forming the kingdom of Germany having started as Austria. So when I finally managed to declare the independence from the HRE and win. Passed Medium Crown Authority and noticed my vassals' vassals were still having little wars. Looked it up on the forums and I guess that it just stops MY direct vassals. Seems mostly pointless but as long as it kept my dukes separated I was willing to let that pass. Couple Monarchs later I finally managed to pass High Authority simply because I was tired of a county being inherited by a foreign lord and having to fight wars to get it back. Anyway I passed it and noticed my inheritance warnings did not go away. So I just let it play out not interfering and sure enough one of my Duchies was inherited by the queen of Greece. Oh and before I forget he was a direct vassal which made me feel more slighted.
I searched the forums for a bit but the only thing I could find to the relation of Crown Authority not working was the sub vassals still warring it out. So is it a bug or is that working as intended? I hope its a bug because then there doesn't seem to be any reason to get medium let alone go any higher up with the Authority.