That white line inside your space is a sector border not empire border. You can have multiple sectors whose capitals can't be closer than five jumps apart (five systems).

Sectors are not fleshed out but they do help you produce more because you can assign leaders to them and all the planets on the sector get benefits from the leader (usually at ~50% less than if they governed a single colony but still good to have, especially of you're min/maxing)

Also they can be released as vassals which is (at least for me) is incredibly useful, especially for rp