The term capital can refer to two concepts:
1) A ruler's capital;
2) A county's capital holding
Ruler's capital
A ruler's capital is the demesne county where their court is located. Patricians with no higher-tier titles share their capitals with the capital of their merchant republic.
Significance
The location of the capital determines:
- Where the court is located and therefore distance, and is also important when an epidemic disease sweeps through the land or the realm is under siege.
- If occupied during wars, it is worth more warscore than other provinces.
- Vassals far from your capital are more likely to seek independence (and vassals bordering the capital duchy cannot create an independence faction)
- Determines the effect of two conversion decisions: "Convert to local culture" and "Convert to local religion".
It affects your army size and effectiveness in several ways:
- Vassal levies
- Demesne levies
- Which county/holdings gets the "capital county" bonus to troops. (+50% for independent rulers, +25% for vassal dukes and kings; only applies to the capital holding of each county)
- Which other demesne counties/holdings get the "capital duchy" bonus to troops. (+25% for independent dukes and above, +15% for vassal dukes and kings; only applies to the capital holding of each county)
- Which county does NOT suffer from "oversize demesne" penalties to troops.
- Which mercenaries and holy orders are close enough to be hired (based on their respective headquarters).
- The cultural building at the capital castle determines the bonuses which the ruler's retinues receive.
It is also key for many aspects of technology:
- The cultural bonuses that are applied to the whole realm (relations, legalism, ...)
- Retinue size from Military Organization technology
- For merchant republics, the Trade Practices level and thus the number of trade posts each family can build
- The levels shown in the technology screen F5, when not hovering over a province
- Where you spend technology points
- Where your spymaster's "Study Technology" mission improves technology
When you have the ambition to 
, it determines which kingdom you hope to become king of, and in turn:
- For pagans, which realms you can subjugate.
- Which kingdom title you must gain for success (+1000 prestige) -- otherwise, the ambition is canceled.
Changing the capital
It is possible to change your realm's capital to (the capital holding of) any of your demesne counties. You must not be at war, and your current capital must not be under siege (including by raiders).
The capital of your realm is changed by clicking a province and then clicking the 
Make Capital button.
A ruler who has already changed their capital cannot change it again unless:
- At least 50 years have passed (10 years for nomads), OR
- Moving "back" to the de jure capital of the primary title
Merchant republics can only change their capital in special cases:
- Moving to the de jure capital of their primary title
- Make sure your de jure capital is not inland, because an AI doge will move the capital there and destroy the "merchant" part of the republic!
- Moving from a castle to a city
The capital can also be changed by granting the current capital to a vassal:
- You cannot grant your capital after using the
Change Capital button or while at war (the tooltip is misleading), but you can effectively move your capital multiple times this way. - The new capital county will be the one at the top of the list of lands that can be granted, and is typically the oldest held county.
De jure capital
Most titles higher than count-tier have a historic de jure capital. For some titular duchies and kingdoms, controlling this county is the sole requirement for creating the titular title.
The AI will often revoke the de jure capital from a vassal, even without justification, in order to move their capital there.
For the vanilla map, de jure capitals are listed at Duchies, Kingdoms, and Empires. You can also confirm a title's de jure capital:
- by clicking the title crown, and seeing that it centers the map in the same location as clicking the province crown.
- by hovering the province in the appropriate de jure map mode (e.g. "De Jure Kingdoms" to confirm a kingdom's capital)
Strategies for selecting a capital
Select a province with many settlements and buildings.
- Playing tall: Extra settlements you hold in your capital benefit from the bonuses provided by your Marshal (train troops) and steward (collect taxes). Even with gavelkind succession, you can easily take back baronies.
- Playing wide: Vassal barons in your capital provide levies at the highest possible fraction. They provide both levies and taxes reliably (except for Catholic bishops), as they will not be lost to gavelkind succession or faction rebellion.
Select a province in a large duchy to maximize demesne levies, avoid the "too many held duchies" opinion penalty, and minimize potential losses with gavelkind or feudal elective succession.
Prefer coastal duchies to maximize army mobility and city income.
Place the capital in a large kingdom in a large empire to maximize vassal levies.
Place the capital near the centre of the realm to discourage independence factions.
Avoid epidemic disease hotspots such as Italy or Greece. Alternatively, invest heavily in hospitals, or hold multiple top tier titles in order to move your capital whenever disease strikes.
Select a technologically advanced province for short term bonuses and spread of technology.
Upgrade your capital when you have sufficient wealth. Construct new buildings, new settlements, and even new settlement slots (with 
The Reaper's Due and sufficient prosperity).
Share a capital:
- Sharing a capital allows both rulers to add province-level benefits, such as those from a Master Engineer. Landless rulers are always treated as being within diplomatic range of China.
- Sharing a capital with an occasionally-landed ruler (such the Ecumenical Patriarch) lets them earn tech points while landed and spend tech points while landless.
Capital holding of county
A county's capital holding is the holding which will be sieged first when the county comes under attack. The controller of the county's capital holding is the holder of the county title as well.
Changing a county's capital holding
By granting the county title to a baron within the same county, the new count will change the capital holding accordingly:
Significance
Counties with a non-castle as their capital holding are easier to capture during sieges, and easier to sack during raids.
Some counties do not have capital holdings. Such "empty" counties are usually held by nomads. To occupy such counties, a fort has to be constructed by the invading force if the county has no holdings at all. Also, such counties' free loot is not protected by the fort levels of its holdings; some horde troops should be parked at valuable but vulnerable counties (usually counties with Silk Road trade posts) so that tax collection is not hampered by raiding.
See also
- Primary title
- Title actions#Make county capital, to change which holding (within a county) is the county capital.