They could.
On the other hand, another problem is that to properly represent the shifting alliances, raising and falling families and so forth, you're looking at a few dozen families at least - that's a lot of tags.
What Paradox appears to be going for, looking at some recent screenshot, is going by claims of descent - each of the four daimyo does not represent a specific daimyo family (Mori, Oda, etc) but one of the four great court families of pre-feudal Japan, from which the samurai clans claimed descent (Taira, Minamoto, Fujiwara, etc)
Thus we get the Fujiwara "nation" holding North-East Honshu, representing the clans claiming Fujiwara descent that were concentrated there (Date, Uesugi), the Taira "nation" in the middle (Oda, Ise/Hojo), and the Minamoto nation to the west, representing the Mori, Takeda, etc clans.
One presume that there will be lots of "On monarch death: A Taira pretender will rise" allowing the Ise-Hojo and Oda to try and upstage one another every few years as the biggest, baddest Taira claimant.
It's a nice way to cut down on the number of tags needed, I suppose.
) Adding new countries and provinces is not that hard actually. Getting them done with research and accurate borders and history however is something else that Paradox don't want to waste time on. Luckily there is WWM. 
