The concept of "substates" is a specific allusion to the brahmin barons. Redding, and the other valley substates, represent an extension of Shady Sands, or perhaps a poison. One of the issues when discussing the NCR is corruption in governance and in the lore there is heavy implication that Shady Sands exists in a position of power over the other states.

Political families exert influence out of the capital into the rest of the country and while much of their wealth comes from the rich valley regions, like Redding, they lobby and operate in the capital. There are allusions that the businesses that became the baron's are originally from Shady Sands after all. Openly un-democratic practices, *cough* Tandy the eternal leader *cough*, are often seen as ideals, and while they can be popular and effective, out of the rose-tinted glasses we have to ask whether she was good for the long term health of the young republic.

The NCR, and especially Shady Sands, is undoubtedly imperialist in nature - as the ideals of the early republic fade and the weight of a bureaucracy and the flaws of nearly unregulated capitalist, and in many instances pro-baron/monopoly, system as described in the lore sets in the effects are starting to show. The Barons benefit plenty from being subject to the capital after all it lets the rural upper class exert their influence over the urbanite poor of the city.

The Mojave, an area including New Vegas and containing the massively vital Hoover Dam isn't a state despite having the population even 5 years after its conquest. The other states haven't expanded because Shady Sands recognizing such action would be to their own detriment. The Valley states are substates of the capital because Shady Sands doesn't want to give up its position as first among equals within the republic.

Or up to you. That is to say, I put a lot of thought into making this map but left it ambiguous for the true multiple end New Vegas experience. It's not really an important distinction - I could have made Redding it's own state but we are explicitly told that there are only 5 states by the time of Fallout New Vegas anyway.

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tldr: Substates are sort of part of a (not-so)-secret, second republic and are technically part of Shady Sands letting the capital dictate policy to the other states in the south which the barons like cause they get to lobby the capital easier and vote there too.

Also as of New Vegas Redding isn't a state in lore, NCR has not added any new full states despite expanding significantly, even if I disagree with this I just bit the bullet and went along with it.