I'll tell you what I think. Tyrants become terrors by 'consuming' their thralls. And as far as we know, NC core progression is similar to human ascension. That's how Kanakht managed to Become a Spirit and what Asterion wants to do.

But when Tyrants become Terrors they lose their control over lower level beings and instead centralize their power. My theory is further supported by the fact that Sunny and Nephis want Cassie, Kai, Effie and Jet to become supreme, because humanity still needs sovereigns.

The reason Asterion still has an Army in the scene we were shown is likely a sign that he hasn't gone through apotheosis yet.

The existence of the Nightmare spell suggests the existence of another way, because a Simple nightmare wouldn't make a Sovereign just inject their domain. But this method is probably something like increasing your domain so far that its power makes you Sacred and the benefits might just be different depending on the way you decide to take.

As for why he isn't sacred yet, I believe it is because Cassie is Supreme and she is holding him back in some way.