"Can completely take over all the territories of a Lord after defeating him...
Is this implying that the Lords should kill each other?"
Bai Yi read the prompt over and over again to make sure she wasn't seeing things.
The effects of the conquest feature are mainly divided into two aspects, one is aimed at the Lords; after thoroughly defeating a Lord by killing or making them surrender, one can take over all their territories.
This even includes territories not in this world!
Even if not desired, these out-world territories can be turned over to the game for handling, and further compensated with resources, but the specific compensation wasn't detailed on the panel.
With this rule, however, all powerful Lords will probably develop enmity in the future and may no longer fully trust each other.
The stronger the Lord, the larger the territory they own, and the greater the benefits after conquest!