That is largely because of the AI's inability to build up its holdings
I keep seeing this from people on the forum. I don't know why. I see the AI upgrading holdings all the time. It's not as efficient as a human, but within 100 years of game start, I see all kinds of buildings among my vassals holdings that weren't there when the game started.
Contracts are useful now that the AI actually upgrades holdings, but you need to negotiate the right kinds of contracts. There are basically two formats for contracts that I like to use, depending on how far I've progressed technologically.
1) Uber-vassal levy contracts: Once you have march contracts available, I start putting vassals on contracts that reduce taxes and increase levies. Then I also slap a March clause on them. The end result is that the vassal actually has money to do stuff and can upgrade buildings (since march reduces army costs and makes their lands more defensible and their taxes are really low). I get the levies. Sure, someone is about to say, "Levies suck." But why bother forcing a vassal to give me another 0.1 ducats a month when I could get a few hundred levies while they upgrade their holdings. I never have to use those levies if I don't need them, but they add to my visible military strength. That has all kinds of benefits. And if I just need another 5000 levies to throw at a problem, I have them. Meatgrinders do happen.
2) Taxes for everyone!: When I get scutage available, I'm also usually in a position where my MAA costs are really high. That's when I start swapping everyone over to high taxes/low levies contracts with scutage instead of marches. At this point in the game, I'm probably a big empire that doesn't need another 500 levies from a vassal, but I could really use the cash. Furthermore, if they've been sitting on a march contract for a century or so, they've had a chance to upgrade their holdings enough to actually have enough revenue to make taxes worth it.
Most of the clauses are beneficial to vassals and not lieges, but forced partition has its uses. I've also slapped fortification rights clauses on heirs sometimes so that they have an easier time developing their own land, which will get integrated into the crown's lands when they inherit.