I gave banks as an example. It could just as well be the Hansa or the orders. Magnates can also conduct diplomacy:
1.
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Source: Wikipedia article "Treaty of Radnot"
2. War of the Polish Succession
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Source: Wikipedia article " War of the Polish Succession "
3.
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Source: Wikipedia article “Civil war in Poland (1704–1706)”
There are a few more examples, but I don't feel like explaining and citing sources. You can probably find all of these examples on Wikipedia:
4. Targowica Confederation
5. Lubomirski's rebellion
6. Zebrzydowski rebellion
7. 1587 Polish–Lithuanian royal election
8. Lithuanian Civil War (1697–1702)
9. Bar Confederation
They have many possibilities for interesting mechanics:
1. They would have lands on which they could build,
2. They could also buy new lands.
3. They would have an army that they could use,
4. They could legally form coalitions against a new law or ruler like in Crusader Kings called "confederations",
5. Confederations could legally rebel with arms called "rokosz",
6. They could create political parties such as "familia", "hetman's party", or "patriot party",
7. After the ruler's death they could vote for a new ruler and even for nobles from their dynasty: "Michał Korybut Wiśniowiecki", "Jan III Sobieski" or "Stanisław Leszczyński",
8. They could vote in the Sejm and pass new laws.
9. They could use the right of liberum veto and break up the Sejm.
In CK2, in the DLC The Republic, there was the option to play as wealthy noble families in the republic, who didn't own land. I think mechanically it has potential on a similar level.
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Source: CK2 Wiki article "Merchant republic"