I played several Huns game today and summarized some War mechanics in the Stadia OpenDev:
One can declare a war at any time, but that will be a Surprise War. Therefore you will not have any morale high grounds and the negotiations will not showing up properly.
Each players has a Morale Bar towards each other, begins with Morale at 50. To be precise, it is actually a War Readiness/Demand bar. When you have grievances, and is able to demand something from AI, you can try to demand it, then withdraw the demand, and the Morale Bar will go up. This means your people are becoming discontent because their demands are not met.
Repeat the process, your people will become more discontent, and the Bar will eventually reach 100. If you refuse AI's demands, AI's Morale Bar will go up as well.
When BOTH your and AI's Morale Bar reached 100, you can "properly" declare war, and not receive any Badges.
Let's say you the player has more military strength. You keep destroying AI's army and take its city, the AI's Morale Bar eventually drop to 0 - which means the AI doesn't have any more readiness to continue the fight, or the AI doesn't want any demands from the war anymore (one will not demand anything when they are losing). Therefore you can force the AI to Surrender.
Now you have 200 Morale over AI (you have +100, and AI has -100). During the Surrender Negotiation, you can use these 200 Morale to demand things from AI. The game will present you a list of negotiation choices, each costs some Morale, and when all the 200 Morale are spent - which means all your people's demands generated before and during the war are met - then it is possible to finish the Negotiation. (That's why I said this Morale Bar is more of a Demand Bar)
The Negotiation Screen - note that it is still a Work In Progress:
There are 2 outcomes of Negotiate a Surrender:
1. You demand yourself to become the defeated's Liege, and the defeated become your Vassal. To quote u/RNGZero from Reddit (I have been discussing war mechanics with him/her for a while):
"The war loser will get their taken over cities back but not all territories. All Lux/strategic resources both sides have (winner and loser) become shared for free and trade between either cannot happen (resources are already shared). Some agreements will happen between the cultures like mutual non-aggression pack and both cultures will be on the same "team." The vassal can become free through force or if their liege allows it."
Note that the Vassal is not being eliminated and will continue the game.
2. You demand ALL of the defeated's cities. The Vassal option will not be available when you do that.
After that, the AI will be literarily eliminated from the map. However, it still exists in the Diplomacy window, you can even sign treaties with it. I don't know if this working as intended or a bug, but currently it is like that.
Overall I would say this is a sophisticated and clever system for war and diplomacy. It is like the representation of "war is an extension of politics (demands)".