When invading a country the territory captured is always hashed and it will be unitl you conquer them unless they go GIE (Government in Exile). First of al having hashed provinces isnt a bad thing, you have almost no revolt risk and receive more LS (leadership) and IC (industrial capacity) than when you conquer them. What you wanna do with your opponent can be decided through wargoals in the Diplomacy Screen. In your example playing England, you didnt declare war but Germany, most likely did. When you DOW you always have to choose a wargoal, byt when you're attacked its automatically conquer till you choose one. Basically you got three, sometimes four, options:
1. Conquer
2. Get Territory
3. Puppet
4. Install democracy/communism
Conquer menas getting it all there territory, though in the case of majors this usually doenst work out this way...entirely. The second one gives the option to go for certain territory one step at the time. You can add new wargoals every month unless you choose conquer. So you can also add extra territory. Puppet, means they become your puppet including all their territory but excluding any puppets they might have. The fourht option is usally picked before puppeting. This way you make sure you get a government you like and dont end up with Hitler or Mussuloni as rulers of your puppets.
But as long as there is one country is an faction and the country in question is part of a faction, they will go GIE. This means you conquered their country, but they fled to i.e. London and continue fighting and the provinces remain hashed. As said thats not a bad thing in general.