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Cultural differences and tendency for bigger cultures to push theirs onto smaller cultures.

Source: living in a country that run away from bigger brother few decades ago.

To put it a bit colorful: Because in the Game of Nations many people want to be King. To have many Kings you need many Kingdoms. Also Unity makes you strong and usually your enemies will do whatever they can to divide and conquer.

More like people don't like when people from far away try to enforce seemingly stupid laws. Having a vote that actually matters is awesome.

The other question is how those tiny kingdoms organise into bigger structures to have economy-of-scale, while still retaining their sovereignty on internal matters.

Yeah, that usually ends well, as we have seen in history. /sarcasm

Just look at Austro-Hungarian Empire, Yugoslavia, etc. You can't force cultures to merge, a problem also acutely experienced in the EU at the moment.

They're kind of trying that with the EU. Mixed results.