Here I’m trying to defend that:
Look at for example Total War: Attila. Western/Eastern Roman Empire and Sassanid Empire are specific political entities.
However for the “tribal” people like Saxons, Franks, Goths, etc., they were not a single political entity. They were a number of tribes, hordes and small kingdoms, either forming some sort of confederacy, or even being totally unrelated. You cannot call the Saxons in that period “Saxony”.
When it came to campaigns set in later periods (I consider Thrones of Britannia as an expansion to Attila as well), they became “Wessex/Mercia.”, “Kingdom of Charlemagne”, “Visigothic/Ostrogothic Kingdom” because there were specific political entities.
Back to AOE4:
The “Chinese” included several dynasties, otherwise they can be called in the same fashion as “Shang” in AOE1. The “Rus” had several independent states, and each one of them (Kiev, Novgorod, Moscow, etc.) were not big enough to represent the whole people in that period. The Holy Roman Empires and the Abbasid Caliphate, however, were one single political entity and encompassed several different nations of peoples. You cannot call the Abbasid Caliphate as “Arabs”, “Saracens” or “Persians”.
BUT I’m not saying this is the best way of naming or faction choices, especially considering the “traditions” of this series.