Hi. Great question.

I wrote an essay on this topic, so I think I can answer your question, hopefully it meets the standards. I will be using the nation of Georgia as an example of an incorporated nation-state, because it engendered a conflict between soviet leaders over how nations/republics should be treated within the USSR. The Georgian Affair, briefly, involved soviet higher-ups Dzerzhinsky and Ordzhonikidze calling in the red army to dispel political unrest over the level of autonomy that Georgia could expect to enjoy within the USSR.

I think the underlying issue for your question was addressed directly by Lenin in a series of notes he dictated during Dec. 1922. titled 'The Question of Nationalities or "Autonomisation."' The essays weren't published until after Lenin's death. The Question of Nationalities can be contextualised as a response to some of the problems involved in the creation of the USSR: i.e, your question, how should the state treat ethnicities and ethno-states.

In the essay, Lenin bemoaned that the current state 'apparatus' had too many hold-overs from Tsarism, and had merely been 'anointed' with 'soviet-oil,' quote:

"The apparatus we call ours is, in fact, still quite alien to us; it is a bourgeois and tsarist hotch-potch and there has been no possibility of getting rid of it in the course of the past five years without the help of other countries and because we have been "busy" most of the time with military engagements and the fight against famine."

Lenin sees national minorities in the Soviet Union as 'oppressed' nations, as the USSR as the potential 'oppressor' nation. Referring to a political struggle called 'the Georgian affair,' Lenin writes: “in this case it is better to over-do rather than undergo the concessions and leniency towards the national minorities.” He sees this as a concession to past injustices/inequalities.

The Question of Nationalities, can be read as a warning against the organs of the Soviet Union falling into imperialist or ‘chauvinist’ attitudes towards national minorities. Lenin criticises Stalin and Ordzhonikidze as ‘Great-Russian’ bullies, and is wary of Dzerzhinsky’s ‘truly Russian frame of mind.’ His addition of ‘practical measures’ reveals the fear that the union of socialist republics will be weakened if the centre regresses into ‘imperialist’ behaviours, and that this attention to the Soviet ideals is more important than the processes of centralisation and incorporation of peripheral nations into the socialist sphere.

In short, the USSR was organised into 'titular republics', because of foundational ideologies of the USSR regarding national minorities. Many of these ideals, however, were eroded after Lenin's death and Stalin's rise to power.

Sources:

Smith, Jeremy. "The Georgian Affair of 1922. Policy Failure, Personality Clash or Power Struggle?." Europe-Asia Studies, 1998., 519,

Jones, Stephen. “The Establishment of Soviet Power in Transcaucasia: The Case of Georgia 1921-1928,” Soviet Studies 40 (Oct. 1988): 616-639.