Encirclement effect.

When you encircle an enemy's province the unit that's in the province (Asumming there's a unit in there), the units moral, should be lowered and when they are being attacked their defences shouldn't be as effective when they are defending in an unencircled province. The same can be done when attacking, unit's attacking power would not be as effctive when attacking in an unencircled. This effect is more realstic and it prevents somebody just having a stack of 10 and still being able to just blow through a stack of 6 with ease (which isn't really realistic).