Both. You can have a general idea what a regent is going to want to do, and build some broad arcs pretty quickly, but once the players start taking action it becomes easy to start refining and developing the NPC’s and what they are doing. I generally put NPC’s into one of three categories, friend, enemy, could-go-either-way. And I put could-go-either-way NPC’s in organizations belonging to friends and enemies. This allows the PC’s to solidify relationships by winning over NPC’s who were ambivilant, or turn around enemies because of friends they made there, or even lose an ally because of enemies made.
So, then I try and introduce the other regents one at a time. It can be easier to do them all at once using a marriage event (like in the back of Ruins of Empire) or the Sword and the Crown, but generally its too much to take in, and the NPC’s don’t get properly fleshed out. Doing it one at a time works best.
Once the PC’s know their neighbors, generally they start the ball rolling and keep it rolling on their own. As you might have surmised, I like to keep more balls in the air than many DM’s, because otherwise the world looks exceptionally calm. Consider that if the only events that go on happen at the PC’s pace of action (three or four actions per season) then one really must wonder if the neighbors spend their whole lives napping. Take Roesone, for example. Diemed is a hostile enemy who wants to recapture his lost provinces (most of Roesone, Diemed, and Ilien). You can expect he’ll be bothering Roesone a lot. Then there is Ghoere. Ghoere has other enemies and projects, so he might menace Roesone about a third of the time (including things that don’t require action, like improving fortifications on his side of the border). So that should occupy Roesone full time. But our ruler has two allies and a friendly neutral nearby and a small border with Osoerde, a bad boy realm who won’t directly threaten Roesone (at least at the start) but might make the neighborhood more dangerous. Allies make demands on their friends time. This is the realm equivalent of asking for help on moving day, asking to be picked up at the auto shop, watch my dog while I’m out of town, and so on. You can say no to this stuff, but if you always say no, your friends start looking for better friends. A lot of this is nicely handled with random events.
For those of us who would use a lot of random events, use this example. I roll a serious one -say assasination- and I like it, but I also think I don’t want to put it to close to the regent, because we already have things to do and I don’t want to derail that. So the assasination takes place in a friendly realm, say Medoere, and a minor official, say a sheriff, is killed. Evidence (letters, a badge, a gasped last word, an eyewitness) links the assassin back to Roesone. The object here is for the regent to take a moment and delegate. I think that irdeggman is assuming that all random events take a domain action and impose penalties for failure, but it doesn’t have to be that way. Once in a while I use random events that require adventure actions and risk a loss of regency, but most of the time I see a random event as being a way to describe the world around the players so that they learn more about their fellow regents (and the way the world works) without having to deal directly with them. So back to my example, maybe I decide that el-Hadid is behind the assassination because the sheriff was about to expose some criminal activities of Port of Call Exchange (smuggling, say). The PC might decide to do nothing (sorry, busy), in which case relations with Medoere decline slightly. In this case the assassination is never solved. The PC might delegate, telling local law officials to cooperate and investigate. In this case, several months later (depending on dice) some law official tells the PC that the assassination is solved, explains it all to the PC, and the PC has now given minor aide to Medoere and knows something about el-Hadid. Or the PC can get directly involved, solve the mystery as an adventure and impress Medoere with the value of friendship with the PC. I think there should be a lot of events like this, small events that test the PC’s reaction, and teaches the PC about the neighbors without putting the PC in an act or pay-for-it situation.
Based on player reactions to each of their NPC neighbors, you will start to get story ideas for each of them. Some may directly involve the PC’s, some may involve them directly, others will take place on their other side of their realm.
Here is another example of how I keep the world busy without requiring action from the PC’s. Osoerde can menace Aerenwe with contest actions and espionage actions, and there are always rumors of war. Roesone will probably prefer a strong Aerenwe as a neighbor to an enlarged Osoerde (although players can surprise you) and will feel at least a little pressure to bolster Osoerede at least once in a while. Osoerde might frame Roesone for things every now and then, might use Roesone as a base to spy on Aerenwe, and might put bandits in the Erbannien through Roesone. So while all of this is easy to ignore, since Roesone might never be harmed, many PC’s will feel like they should help. Especially if you paint Jaison Raenech as especially villainous.
The key to keeping the world busy without overtaxing the world is to make a lot of stuff happeing on the perifery of the PC’s world. If you make the ruler the center of your thinking about what is happening in the world (random events per ruler, consequences for the ruler, number turns available for the ruler) then there isn’t much happening. If you think instead about the domain as the center of what is happening, you still want to be aware of what the ruler can handle (resources, including time) but you can spend time describing stuff that’s happening because 1) it makes the world seem more real, 2) it explains how you will do stuff without giving the players a rulebook and 3) it is a way to describe all of the other rulers without handing someone a book.