Government falling does make peace with all enemies, but it does ALSO force you to cede any and ALL provinces of yours that are occupied by the enemy. So if you are a 45 province france having overrun italy and germany and you are hit by your government falling while england occupies what is north of paris, spain occupies what is south of paris.. then.. all the germans and italians will declare independence, england and spain will get all the provinces they occuply, provence, brittany and hugenots will declare independence. You will have lost up to 44 out of your 45 provinces in one go if it is done "wrong".
