What I think I'm hearing is the following:
1. When a master capitulates, all of it's vassals will immediately be at peace with the victor.
2. This will be a special peace that does not move victor units out of former-vassal territory.
I believe there are some remaining questions:
-How long can victor units move in former-vassal territory?
-Will there be a cooldown on this peace with former vassals, or can war be declared immediately?
-Will wars on former-vassals start off with forcing victor units out of territory? I believe this is the current behavior on starting a war against someone with whom you have open borders.
-Will there be a diplomatic penalty for declaring war on a former vassal?
-Will the master consider the power of it's vassals when making the capitulation decision, or just it's own state?
I'm trying to find the logic in why a conquering empire, upon receiving the capitulation of a master, would always and without option choose to halt war against former vassals. There are plentiful examples where capitulation of the master might be a desirable outcome, but where victory over the vassal might be the primary goal - for example, if I have a vassal as a neighbor, and their master is further away, I am currently unable to vassalize that neighbor. I either have to conquer their cities outright, or, under the new logic, I have to force the master to capitulate, which frees the vassal so I can declare war on it a second time in an effort to vassalize it. This just seems convoluted, when in "reality", I'd absolutely maintain war with the former vassal after it is "liberated" from the master.
In any case, the liberation mechanic is much better than not allowing capitulation at all.