The Empire is a meritocracy, save for the title of Emperor, which is inherited, though there are a number of instances where the reigning Emperor has adopted adults and made them his inheritors. One more than one occasion, these adoptions have crossed racial lines; Kazak the Conqueror, the original Emperor, was a dwarf. The current Emperor is a human as is his son, the heir-apparent.
Nobles abound throughout the Empire. Many of their stations are inherited but new fiefs are often created and old ones destroyed by the mechanisms of the Byzantine beaureacracy of the Empire. In simplistic terms new fiefs and holdings are created for those whom the Empire sees as meriting such rewards. Rarely a lineage of lesser nobility will die out, or be melded into a new clan or house or noble line via marriage, death or catastraphe. When a fief ends it isn't reinstated by the Empire, instead a new line as mentioned earlier will be promoted based on merit.
Since the number of new aristocrats is almost always growing slightly faster than the number of aristocrats being disenfranchised, there's a gradual tendency toward deflation of value of any given fief.
For example, a baron commissioned a thousand years ago (very possible for an elf) would've been a very prestigious post, probably an army commander trying to defeat a horde of invaders or protect a weak flank of the Empire. In current years the same barony while prestigious, would have numerous rivals of the same power level and responsibilities.
Noble families tend to have small estates of inherited land and some sort of inherited duty to go along with it. The above-mentioned barony might be in charge of a military division or march, as would his heirs be. The exact nature of the duty varies wildly. For example, there's a marchioness who is responsible for all the royal vineyards.
Since most of the noble families are inter-married, exactly who is in line for each holding is a carefully monitored and controlled process overseen by a Chancellor.
The Imperial household itself is mostly within a vast complex in the southern capital. The lesser sons and daughters oversee the Imperial beaureacracy reporting to the Emperor. The heir-apparent is personally trained by the Emperor and those he appoints to prepare for a seamless transition of power when the current Emperor passes on.
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