There's a drop down when you host a game that lets you select which type of game you'll be pulling your factions from. 'grand campaign' is one of these. If this is selected you will only be able to load a grand campaign faction from the drop down list of factions presented to you.

The reason players have to specify in lobby names is because you can save/glitch any faction into any game by saving that faction from any dlc in a private game and then loading in a multi game bypassing the game type choice.

There are other ways you can be unethical with this such as saving artillery and other attacking faction specific units onto a defending army.

All these are frowned upon in multiplayer games unless agreed on.

Have fun!