In peace conferences, there are two options where you could puppet a country or annex your land. First, when I started playing HOI4 I didn’t use puppets because I thought I didn’t have enough power over the land. However, after my experiences in gaming, I think that puppeting countries is better than annexing.
In the article below, you can find arguments for why is puppeting better than annexing.
Why use puppets in HOI4?
Puppets are good when you don’t want to lose your time developing the country but still need manpower or need partners (AI) for another war. At the same time, you usually want to use them in when you don’t have any other interest in the area. After all, the country is a bit more independent and you can’t operate it at 110%.
In case you have DLC La Résistance or Together for Victory or Death or Dishonor you get a new possibility of how to get land from your puppets. From these puppets, you can make an annexed territory. As you can see, I prefer to puppet countries first and after some time I annex them. However, you don’t have such options in the vanilla game.
Why use annex in HOI4?
When you annex a country/land you must set garrisons. Then you will get all of the resources, factories, and manpower when this land is yours. So if there is something that you want to have 100% just for you and your country you must annex your land.
However, during annexing keep in mind that you want to have the countries connected “overland”. This is important because of their possible separation in case of war. If you connect “overland”, the connections won’t be broken by the enemy. Or again, remember that if war breaks out and you have territory on the other side of the world, you’ll need a lot of ships to secure the routes to the connection.
Is annexing really that bad?
Honestly speaking, annexing is good, mainly because you have all of the countries. Moreover, you can get 100% from a specific country when you deal with guerrillas. However, don’t forget that it will cost you a crew and sometime before everything is transferred to you. If you have La Résistance DLC and you combine agents and garrisons, the process of annexing is better. Nevertheless, as I mentioned before, using puppets and then annexing is a much better way.