Thinking in the new way ("City specialisation") rather than the old way ("I want every city to be a powerhouse of everything") is the key to understanding all of the new buildings, including the Chancery of Estates.
If you choose to specialise just one of your ten cities in Sovereignty, you can support on a positive resource and research balance well over 100 squares of L1 sovereignty. The city can, of course dual and triple-purpose itself, as the support of units, spells etc are not so contingent on research points - and gold is still reasonably abundant.
If a number of the largest players in the alliance specialise a city in sovereignty, an alliance can very much carve out its own chunk of the map of Illyriad, presenting a public claim to territory and preventing people from settling, moving (via Exodus or Tenarils) nearby.
Further benefits will (in the near future) be available, such as getting toponymy rights over the territory in their possession. Also, as and when specialist harvestable resource types are introduced this will further provide an economic incentive for claiming sovereignty at L1 over parts of the map (and the potential for inter-player/alliance friction that this will help catalyse).
I would suggest that people should a) think laterally, and b) clear-out the mindset that every city needs to be an identical copy of every other city and embrace "city specialisation", and c) run some numbers. We believe the Chancery of Estates is - as it is - an incredibly useful building right now, and will become even more so in the future. If, however, you don't value claiming your "neck of the woods" very much, then this building isn't really designed for you. Not every specialist building is going to appeal to everyone!
Regards,
SC