I've missed a bit here, but I'll chip in late...
Yes, I use subinfeudation.
IMTU, A Sector Duke swears his fealty to his Archduke, and through him, to the emperor. Each Subsector Duke swears his fealty to the Sector Duke, and through him to the Archduke and the emperor.
IMTU, it's generally the subsector duke who picks which of your heirs gets your fief.
Any of the "Lords" (knights, Baron-vassal, Marquis-major world) swear to their "Barons-major" (Baron-system, Marquis-cluster, Count-cluster), and through them to the subsector dukes.
Vacancies are filled by the Barons-Major, with the consent of their Subsector moots, as an interim. The Sector moot also ratifies these, for provisional status... the emperor usually signs off on these. But not always.
Any Baron-Major can strip a Lord of Fief and Office, but not of patent, rank, nor social title.
Any Overlord (SSD, SD, AD) can strip a Baron-Major.
Any sector moot can strip a SSD.
The emperor can revoke all noble titles and patents. As can the grand moot. Only the Emperor actually issues Patents...