The more I think about dynasties being cut, the less I like the decision. Dynasties were one of the more original and interesting things about EWoM...the system just needed to be fixed a bit. Like having an heir take over as sovereign after the previous sovereign dies.
Ahh, succession. This is a very interesting point, and one we talked about in great depth. You are right that it does make the dynasty system a lot more interesting.
But the question is, are you playing as your sovereign, or your empire (as in Civ)?
Warning: I'm about to jump into some gaming philosophy stuff, which is a world without strict rules, please bear with me.
If you are playing as your sovereign then continuing to play after your sovereigns death is jarring. It also breaks the emotional tie between the player and his sovereign if the sovereign is just another empire resource, especially if it may make sense to throw away the sovereign so that you can have a promising heir take over. You don't have a hard defined reason to protect the sovereign, or to be so eager to hunt down enemy sovereigns once heirs are available. It distances the player for the contact point that we want them to empathize with the most.
The game isn't about Resoln, or Altar, or Yithril. It's about Ceresa, Relias and Verga. That wasn't conveyed very well in WoM, but will be a much stronger focus in FE. For example you can't select to play Ceresa leading Altar in FE. You can make a new sovereign with all Ceresa's abilities and have that sovereign lead Altar, but Ceresa is a specific person, with a specific history, flavor and personality. She doesn't lead Altar.
It doesn't sound good from a feature perspective. From a feature perspective it sounds good to have more options. To have every sovereign be able to lead every faction, to have the game continue if your sovereign dies by going to your heirs. But there is a change in the way the game "feels" because of those decisions.
So that is why we don't have succession (though it does a great job of making dynasties worthwhile).
The full story is that there were some features that weren't living up to their potential in WoM (in my opinion). It's not possible to just make everything great. And in some cases the best reasonable implementation of something still isn't good enough.
Dynasties was one of those, and I worked on a few designs for them, nothing that was good enough. Some that had good points and bad points, but nothing that felt really integrated into the game. So I asked Toby to pass a pass at a magic wand design for them ("forget everything you know and design them as they should be"). He wrote a great design. Most importantly he wrote a system that integrated in interesting ways with the stuff we are doing in FE.
The bad part is that its a significant change and there isn't a good partial solution (in some cases I leave systems in the game knowing we have post FE plans for them even if they aren't ideal, because I know the game is better with them and the current implementation is a step toward the ideal solution). And that the solution Toby proposed is a secondary system (ie: it requires the FE systems to be finished and polished before we can do meaningful work on it). Otherwise we end up with downstream issues where I change system A and that breaks something in system B.
So dynasties got cut. They may come back post-FE. The plan is to have them back, but I hate to promise anything because anything that far out is always just ideas.
Right or wrong, thats the logic.