They don't have borders anymore, inluence ones. They can be completly covered by another's influence now, but they work the same, you walk up to them and can buy their gear even if your influence covers them. But, there is only one minor nation now, and although they sell unique, and cool armor, it can only be worn by males of the human "Men" race. But they also sell longswords and wood shields that anyone can use.
But, I have not ran into them in the new patch yet, so not sure if anything has been changed.
Edit: Oh, you meant captured ones, I think they just get completley destroyed, but I have never attacked them personally.