Sure, immersion is important, but just because people are complaining about something from a realism standpoint doesn't mean the root cause of the problem is lack of immersion, because as I said, once people are bothered by something they will seek out justification for their feeling and realism is a super-easy way to critique a game... because games are not realistic.
Hm, true enough. To be honest, I really didn't think much about the borders in the first Blorg video because they never got to the point of interacting with any neighboring empire, so I didn't realize the hard 'lockout' effect they had on other empires. It was only explained that the outer edge was the Blorg Commonality border (without explaining the in-game effects of that) and that the inner region marked by the dashed line was the Blorg's sensor range. It was only after I saw how large and instantaneously the Tebedoran empire grew and the effects that had on activity in neighboring star systems that I started to think about how plausible or not that effect was. It may well be that I value that more than others.
An example I can think of from the Blorg video:
"While we're building this colony on Qirbus we are using a tremendous amount of energy for the next 12 months."
Dessic: . o O (Okay, that makes sense. Setting up a colony on an exoplanet would take a huge amount of effort and resources.)
"Oops, the Tebedorans have finished a colony on Ziamori, so that instantly locked us out of all activity on Ereness and Errai. Shucks."
Dessic: . o O (What? They instantly gained unilateral control of what might later become a
sector just because they colonized one planet?)
I can't speak for anyone else on their thought processes, of course.
Most systems don't have habitable planets so it would be pretty difficult to build a star empire if colonies didn't project borders beyond their system.
I never had much problems in MoO2 with this, because none of the alien empires had borders that projected beyond their own colonies either. Your empire consisted of the star systems you had colonies in, and your sensors could still observe ships moving within a radius of your star systems dependent on your technology. I fully understand that it creates challenges for small empires, but those challenges will be faced by all empires at the start of the game.
It seems to me that part of the reason to keep things the way they are is for the aesthetic look of the galaxy map -- the neat colorful regions are reminiscent (perhaps intentionally so) of games like CK2 and EU4. That's not to say it's a bad thing, but if it starts to interfere with the illusion of plausibility it's value should be reexamined, IMO.