The game works with something called "cores". Each country has specific cores that allows you to get all the production and manpower of those provinces, in the case of the netherlands, it´s restricted to the land you start with in Europe. If you manage to conquer Belgium AND Luxemburg, you can take a special decision that makes those territories your cores too.
In the case of the East Indies, those are not cores, and instead if you annex the region you actually have to put on garrisons to prevent an uprising and on top of that you only get access to a part of the industry/manpower.
That´s why keeping the Dutch East Indies as a puppet, while training troops with their manpower allows you to get access to all their manpower (depending on their conscription law, not yours!). Instead, annexing them will give you just a tiny amount of manpower (maybe 70.000 instead of 1 million minus garrisons). However, once the manpower is depleted, you are free to annex them and keep their divisions and resources.
If you want more info about cores/non cores effect on manpower, check on the top of the screen your manpower number, it should display your manpower displayed on army/navy/air, and also how much manpower you can conscript from cores and non cores, and you will see a significant difference in %.
