Real feudalism didn't quite work like that, any more than other government types. In any geographical location, you normally get exactly one lord (baron or higher) or knight (appointed by a baron) as the local ruler, rather than a heirarchy of rulers and governments in the same location. The purpose of having vassals was to get them to manage the lands that you couldn't personally oversee. So you'd expect 1 noble or knight controlling a location, and a separate mayor if there's a town nearby. This is what we already see in DF, so it's already pretty realistic. We just need tribute caravans and liege lords in different fortresses now.
In feudalism the local lord did not control the economy. Society was stratified between different levels of economic governance, between the peasant household and the royal household, each managing it's own economic affairs and production. Higher levels had more rights and greater access to wealth than lower one's.
In Dwarf Fortress we have a single level of economic governance where everyone is (mostly) equal in their rights with only the actual officials possibly enjoying a few extra perks like a nicer room. This does not extend to their friends and family which do not constitute a privilaged group at all.
We have a classless society in dwarf fortress where there is very little private property and the government actually owns all capital. Everyone in the site is equal, everyone makes use of the common capital and consumes the common stockpiles; sounds like Communism in the ideal sense. We even have arbitrary production targets and punishments being doled out to random people for not meeting them, sounds a bit like Stalin, meaning we also kinda have Communism in the not so idea sense.
War happens all the time though. A feudal king gets his troops from those sent to him by fortresses. If he sent troops back to deal with goblin seiges, then he'd just be shuffling the same troops back and forth to literally every fortress, no fortress would get a net benefit from that. Since every fortress is dealing with the same thing every year, seiges would be in the realm of "you guys just deal with that locally and make sure you keep paying your tithes and sending me troops".
The first step to improving that model would be for a "grand army" mechanic, where no matter what government system there is, there are top generals (who could also be a king or duke or whatever in feudalism), the settlements of the nation provide men and resources for building the grand army, and these mega-armies can face off in battle. But they wouldn't necessarily be having this battle in or near a player fortress.
That already exists in World-Gen. It does however cease to exist the moment that the world is created, once the world is created and things are modelled directly rather than being simulated we get a situation where all armies are actually coming from a particular settlement and going to another and only the underlying diplomacy is at civilization level.
Thing is though that having an actually functioning central government above settlement level does not equal feudalism unless that central government actually is a seperate entity and is actually living off the resources provided by the lower entities. At present the central government members are simply members of the capital city government and it provides all their needs just as with it's own local government and everyone else.
If all we do provide is armies and supplies for military reasons we are still Communist rather than Feudal because there is a lack of a ruling class sustained by our supplies. Actually the model starts to rather resemble the way the Swiss Republic used to work.
