My thought is that I like the current system.
In HoI you play General sitting in his command post and planing moves.
You have real time control over your units in a way even a modern General only could dream of. But the system is basically the same.
And on all military map material you will find provinces and areas besides the terrain.
Of course the terrain is paramount in planning advances. But to establish control you have to understand which way the conquered land is organized.
If an army seizes control over a large city and it's outskirts it doesn't march through in a line and take everything. It charges for key positions and may try to surround the area. And after killing of every significant resistance the area may be secured (not talking about partisans at this point) even if not every single house has been searched.
Every province on the HoI-map represents such a bunch of key positions to get control over a certain area.
Maybe the people who live in that area wouldn't agree with the boundaries, but that's a level of abstraction I can live with, for I don't expect the game designers to understand how the boundaries are set in every single country around the world.
Of course: An enemy could take more than half of the area a certain province contains. But as long as the defender holds the one small city with the crucial radio equipment or the airport or the naval base they are in fact in control of the province.
The system of HoI is some kind of grid everyone will be relatively familiar with and it makes much more sense than a squared map grid without any reference for the actual boundaries of everything. And it adds to the feeling - the immersion.
Every native to one of the majors can identify the provinces easily. And he understands what he controls.
In fact: I like it this way and would hate it if this got changed.