Right now I'm playing a game with LoR where I started on a huge map, with the barbarian civ mod enabled on a new world map. Playing with vassal states has allowed me to create the challenge for myself of a conquest victory of the entire map, which would be essentially impossible without vassal states. They allow you to have an overseas region on your side without having to incur the difficulty of maintaining or defending them.
I do think that vassal states could be put more under control, but thats entirely different than saying that they are useless. They've been integral to every game I've played since they've been introduced. It's a heck of a lot of fun to take on the baddest kid in the block, beat him into submission, and then groom him to do your bidding the rest of the game. You don't get the same type of control that you would get if you actually did control that region, but that isn't always practical for time purposes and maintenance purposes.
Also, to be honest, vassal states are a very realistic concept that even more modern-day conquerers like Hitler and Napoleon have had to use in order to "control" vast areas. Vassal states can be unreliable and don't always do what you want, even through coercion, but thats something that has to be dealt with because, in the end, its practically impossible to be 100 percent in control of a multitude of different regions at the same time. Civ actually doesn't do a great job of mimicking this, which is probably why some people don't see a need for them when if they want to conquer, they will just conquer it all. But mods like LoR and revolutions mirror this concept much more realistically, making vassal states not just a convenience, but a necessity when conquering large areas with different cultures.