It's currently limited to unreformed pagans, and applies only in provinces they own that have their own religion. Tribal pagans have to reform (or convert) before they can adopt a non-tribal government, so for those who begin the game as tribes, there will never be a situation in which they become feudal but still have pagan homeland attrition. For the few unreformed pagans who begin as feudal (eg hvitserk, haesteinning), they begin with a single province of their own religion, and will never be able to convert any other provinces as long as their religion remains unreformed.
I still think it's rather illogical to tie it to religion:
Basileus: Time to retake Constantinople from the heathen Norsemen! The Queen of Cities will be ours once more!
Strategos: Sire, the population of the city believes in Odin! This means that we cannot use the road network or any supplies in any way.
Basileus: But the city of Constantinople is the most prosperous place in the world! Surely we will be able to sustain a large army, if nothing else by taking supplies from local villages, won't we?
Strategos: No, sire, those who believe in Odin have no knowledge of infrastructure. They don't even know how to use the infrastructure we built!
Basileus: The Danes also believe in Odin and they use roads just like we do. How do these brutes not know how to do so as well?
Strategos: Ah, the ones who have taken Constantinople do not accept the Fylkir as their religious head, whereas the Danes do!