It has already been announced that all american states would be represented as states in game.
So it's not surprising that people would start asking for the same level of care to be put into other nations especially the ones that had a rather stable administrative division of their territory through the game period.
The American states do not change - no state regions change in the game because that is not how the game works. What Harold is suggesting (and repeated for several months) is that
all possible administrative divisions of every country on earth, historical or a-historical, including microstates, needs to be represented or else the game will be a failure. He wants all of the Kingdom of Hungary to be one single state in the game (meaning Croatia, Slovakia, Transylvania etc. don't exist as states) that then becomes several states later on if appropriate with any possible including ahistorical layouts to be possible (and he also want province borders to change to allow for any theoretical border changes).
Having all of the Kingdom of Hungary as one state would mean you couldn't build factories specifically in Croatia or Eastern Hungary, and that any diplomatic plays would be for the entirety of Hungary, you couldn't prioritise infrastructure in only one part of Hungary, etc. It would be
detrimental to the gameplay for some surface-level historical accuracy that would only work as long as the entirety of Hungary remains a part of Austria since there is no way to split state regions.
For context, he's previously used Civilization as a good example of how borders should work, except I think he wants the tiles to be able to change shape and size down to the pixel level, which is just not how the Clausewitz Engine works.
Also, he has previously said he is not happy with the American states either since they are static and can't change shapes (he's previously talked about how the game needs to have the possibility of having Texas' state borders change depending on what happens, like the Texas state region changing to include all of the US south west).