Anything happening inside a realm is considered politics in this chapter. What happens between realms is Diplomacy, a later chapter.
When a realm is founded, those within the realm and especially its ruler get additional options. Realms, remember, are groups of estates and characters united under a common name and (ideally) purpose.
Firstly, realms are just labels. They have a few details that the ruler can determine, including an official color (to be used on the map, for example), a short and a formal name, just like countries in the modern world (for example, my country is Germany for short and The Federal Republic of Germany in formal texts).
Realms can also list an official language and a description, which are both free to be set to whatever you want. Especially language is an important information for other players if you intend to make a realm that goes to great length in roleplaying including medieval-style speech, or want to play with friends and among each other use a specific language. Nothing in the game discourages setting up realms that use german, french, italien, spanish, chinese, russian or any other language internally. We just kindly ask you to let other players know.
Finally the designation of a realm, as explained under Realms can be changed, but only to legal values (mostly restricted by the hierarchy).
Since realms can contain other realms, a nice hierarchy tree is available to make everything more easy to understand.
The ruler can create manual.positions within the realm, for real or for representative purposes. Some realm positions have actual power (TODO: This is not yet implemented), while others have a nice title and that's it. Positions are very useful to defining the government style of the realm, and there are a number of options to customize them in order to automate realm management.
Laws determine internal politics that can be represented by game-mechanics. They determine the succession and inheritance laws within the realm, though at this time most are not yet implemented.