[1.12][strange] When a faction dies, its outposts should not be destroyed

You also lose all the army units and champions and their gear and all the resources (gildar, iron, crystal, mana, horses, wargs, research, ...).

If you really want the cities and the outposts, you could fight for them...

OP is talking about when you "deliver the final blow to an enemy faction". Sounds to me like he has taken the time to fight for the cities and is annoyed with having to remember to track down and take over every single defenseless outpost first.

Not only do I agree, I'd take it a step further:  When you force a faction to surrender, their cities and outposts should join you instead of committing suicide.  By the time a faction is willing to surrender, going around and capturing all their cities first is more of a formality than anything else.  They can't put up any meaningful resistance and that's clear enough that even the AI knows it, so it's really just a pointless, time-consuming grind, but it also seems to be the only option, given that the cities salt the earth when they suicide, preventing you from even being able to rebuild on the same sites.

That's what I wanted to say. (Maybe it wasn't that clear because the sentence "especially if those outposts are attached to this last city" is nonsense. Of course, they are always attached to the last city.)

I've never seen a faction surrender. But the behavior you describe doesn't make any sense indeed. Maybe the unrest in those cities should be higher, and that's all.

Agreed, as it stands you can't hear the lamentations of their women 

 "

Seriously, it is a valid point. And I would like to see this version of a surrender and/or the old GC2:" we will join with you as Empire faction x is kicking our butts..."

You generally have to be pretty far ahead in Faction Power to get an AI to surrender while it still has cities.  If you have the patience for it, though, it can be very worthwhile to ensure that the sovereign is out with an army when you capture the faction's last city (so he doesn't get killed when the city is lost) and then demand his surrender.  It might take a few turns to get him to talk (instead of claiming to be too busy), but, once he does, I've never seen one refuse to surrender after you've taken all of its cities.

The reward for forcing a surrender is that the sovereign joins your faction as a champion, but with -25% accuracy, HP, and one other stat.  Not ideal for fighting with, but... they're still considered enough of a sovereign by the game engine that you gain Prestige equal to half their level, just like you do for your own sov.  (Note that I play with Stormworld, so some details may be different in vanilla.)

The cost of demanding a surrender prematurely is, as I mentioned earlier, that all of the surrendering faction's cities and outposts are razed, although the sov still joins you, so it may be worth it anyhow.