Being a Liege Lord has the following benefits:

• May station up to 500 troops in a Vassal's village.
• May attack AI or other players from a Vassal's village, gaining honour if within the Vassal's honour circle, and any pillaged goods.
• Vassals effectively increase the Liege Lord's honour circle. (But not the initial players village, the Vassals village creates a new honour circle)
• Liege Lords may have multiple armies of up to 500 troops per Vassal. (This is Rank based with a max being 50 Vassal armies @ Prince.)

For more information please visit the Stronghold Kingdoms wiki:

http://help.strongholdkingdoms.com/index.php/Vassals_%26_Liege_Lords