When it comes to land taken by Napoleon, it serves one major reason, as a humiliation and physical detriment to his enemy. Since land has people, owning land is useful to tax them, thus gaining income which Napoleon either wanted to take for himself or prevent his former enemies from taking. As a result, huge swaths of land were taken from his enemy, such as modern day Croatia and Bosnia (the latter was directly governed by Marshal Marmont whom helped modernize the region with roads) which was taken from the Habsburg Empire, others like Hannover and the Grand Duchy of Warsaw were taken from Britain and Prussia respectively. (Although to be fair, the Duchy of Hannover was taken during the Revolution).

Second, it creates buffer states that the enemy has to encounter before hitting proper French soil. The Confederation of the Rhine was a series of buffer states that Prussia and Austria had to touch before reaching France (and incidentally a large number of the Napoleonic Wars involved the invasion of these states) and later on the Russian Empire had to go through the Grand Duchy of Warsaw before even touching Prussia and Austria (because there were no easy ways to get to Austria from the bordering part of Russia). So the land itself also acts as a buffer.

So, humiliation and buffering; these are the things that help contribute to Napoleon's downfall due to his poor diplomacy. While it would certainly fit in the late 19th and early 20th century, it wouldn't fit in the 18th century mindset that most states were in during this time period.

Although the new French territories and satellite states are a diverse and expansive territories, there was a certain logic to Napoleon's reorganization of the European state system. Redrawing borders, mediatizing smaller territories, creating new entities like the Rheinbund or the Duchy of Warsaw, and incorporating new territories as departments of France served the interests of French power. This empire-building had multiple and overlapping strategic rationales behind it.

One of the primary reasons for the expansion of France into the Low Countries, the Italian peninsula, and the Illyrian Provinces was the Napoleon's economic warfare against Britain. Although Napoleon declared the Continental System in 1806, the French found that enforcing the embargo was an incredibly difficult task. Local notables along the North Sea coast and the Low Countries often turned a blind eye to smuggling and the Continental System ruined the economy of the European coastline. Napoleon had initially sought to have the blockade enforced by local French-appointed intermediaries such as his brother Louis in the Netherlands, but the collapse of trade made the French rather unpopular in these areas. For example, when the French in 1807 sought to draft Hamburg's Prefectural Guard as replacements for the Imperial Guard, it helped fuel an urban riot in which the mob targeted the customs houses and the homes of pro-French municipal officials. Assuming direct imperial control was a way for the French to restore order in these areas and ensure that the blockade was enforced. Much of the major acquisitions on the North Sea coast and patterns of fortifications were centered on controlling the riverine traffic of major rivers. In the case of the Illyrian Provinces, French control of this region cut of the Austrian Empire from the Adriatic and ensured French had the control of the river mouths leading into the Austrian Empire.

There was another side to the Continental System beyond just wrecking the British economy. Napoleon conceived of expanding French control as a part of a new economic order that displaced Britain as the economic master of the continent. Part of Napoleon's abortive plans for Europe included a massive canal project that would link the Elbe, Rhine, and Paris into a cohesive economic unit. These projects would restore the moribund Hanseatic trade and reorient European trade towards the new French metropole. In Napoleonic Italy, French-led economic policies sought to create a demi-colonial economy in which the Italians provided raw materials like silk and commodities like grain in exchange for finished French goods. Like the blockade, this was a difficult task to accomplish and the failures of the new French economic order mirrored the problems that came with enforcing the blockade. Local notables often found it difficult to participate in a political system that relegated them to a secondary position. Napoleon assumed that assuming direct control over these regions would resolve the matter, but they often exacerbated these problems. Direct French control often increased the already incredibly high tax burdens and contributions system. Napoleon, like many conquerors before and after, sought to displace the burden of military occupation away from the metropole and the result was these new departments had to contribute increasing amounts of blood and treasure to the empire.

Napoleon's contention that the solution to the problems on the Empire's periphery was correct French management had roots that predated Napoleon's rise to power. Once the Revolutionary Armies had thrown out the invading Prussian and Austrian troops, they immediately began the process of erecting sister republics in Germany, the Low Countries, Switzerland, and Italy. Part of the imperative behind this was ideological, but the sister republics also had a strong political component behind them. By enabling internal reforms like the abolition of feudalism and the mediatizing of Church properties would render these new entities more efficient and useful for the projection of French power into the continent. the policy of annexations also predated the Empire as the Republic sought to restore the "natural" borders of France. The Continental System itself had its origins in Revolutionary policy; Sieyes would claim that that German North Sea coast "was the most important part of the world for France." There were also various calls within France for a reorganization of Germany under French leadership. Napoleon, quite characteristically, took these multiple Revolutionary initiatives and systematically implemented them. The Rheinbund states reflected a distillation of these policies. The rationale behind the Rheinbund was to create a centralized buffer state in Central Europe that would naturally be aligned with French interests. New territories like the Kingdom of Westphalia and the Grand Duchies of Berg and Frankfurt were staffed by French-appointed officials. Napoleon offered loyal German monarchs enlarged territories, encouraged internal reforms, and a share in the spoils of Napoleon's wars in exchange for accepting Napoleon as their protector. The price of this protection was that the Rheinbund states were not able to stand on their own against the major powers flanking them. Like his Republican forebears, Napoleon shared the conceit that French-led modernization would naturally create wider loyalties to France.

Finally, some of these new territories were the response to immediate events in which prompted Napoleon to redraw the map of Europe. Napoleon's creation of the Duchy of Warsaw stemmed from his experience fighting Prussia and Russia. His successes led to French control over Polish territory and Napoleon felt he could not simply give it back to either Russia or Prussia. The entreaties of Polish nobles prompted him to resurrect the dismembered Polish state in a truncated Duchy nominally under the rule of his ally, the King of Saxony. Similarly, internal squabbles between Bourbon Spain's monarch and his son prompted Napoleon to resolve the Gordian knot and replace the Bourbons with his brother Joseph. New territories on the edges of the French Empire often had a more ephemeral and open-ended quality to them. Napoleon would periodically hint at the return of the Illyrian Provinces as a reward for a friendly Austria. The borders of Bonapartist Spain were always uncertain with Napoleon seeking to annex Catalonia and Valencia to France proper. In the case of the Duchy of Warsaw, Napoleon constantly hemmed and hawed between hinting at enlarging the Duchy into a restored Polish kingdom or declaring his interest in Polish matters finished.

Ultimately, much of this Napoleonic state-building backfired upon the Empire and functioned in ways that countered French interests. While some quarters in Europe welcomed protection from British trade, few were willing to countenance the price of this protectionism. The enlarged German states of the Rheinbund proved to be a liability in 1813. While they nominally obeyed their protector, Rheinbund monarchs felt secure enough to negotiate with the Allied armies precisely because their enlarged armies gave them a negotiating chip.

But perhaps the greatest impediment to stable French rule was the effect the Napoleonic Empire had upon the European economy. In short, the Continental System not only failed, but it exacerbated economic problems. The case of the Grand Duchy of Berg is instructive here. Unlike the other Rheinbund states, Berg was geographically positioned where the Low Countries and Hanseatic ports were its main markets and suppliers. The closure of the Rhine and Hansa trade as well as French protectionism meant that Berg's economy collapsed. The situation was so dire that a delegation of Berg notables petitioned France in 1811 for Berg to be annexed by France to remove customs barriers. Lobbying from French manufacturers, who also were hurt by the Continental System, prevented this petition from gaining traction, but its very existence is a testimony to how ruinous Napoleon's economic system was to the continent's economy.

Sources

Aaslestad, Katherine, and Johan Joor. Revisiting Napoleon's Continental System: Local, Regional and European Experiences New York: Palgrave Macmillan, 2014.

Dwyer, Philip G. Napoleon and Europe. Harlow, England: Longman, 2001.

Grab, Alexander I. Napoleon and the Transformation of Europe. New York: Palgrave Macmillan, 2003.

Leggiere, Michael V. Napoleon and the Struggle for Germany The Franco-Prussian War of 1813. Cambridge: Cambridge University Press, 2015.