Diplomacy can build a network of insurance policies through defensive and military alliances, expand your income through trade and extortion, and explore the map; expanding the scope of your vision far past your reach. When you have a tightly nit group of overlapping allies you can even destroy other nations without expending any troops of your own; two, three, four front wars become much less threatening.

Factors that dictate how factions view you:
~Historic: the standing historic relations as interpreted by CA.
~Fear: how powerful you are in relation to this faction.
~Buddy System: you share friends.
~Enemy of my Enemy: you share enemies.
~Tradable Assets: you control commodities they do not.
~Standing Treaties: you have signed treaties with them.
~Gifts: when all else fails.

Historic
The predefined view of factions based on what your faction did before you started playing. Example Carthage seems to reflect the relations they had with Rome after the First Punic War, but before the secound (they still exist). Seluecid is hated by the eastern cultures, the Hellenic factions have their distain for each other, everyone hates barbarians, etc. Some of these views can fade with time, some are constant. They all effect each other and can magnify the Buddy System and Enemy of my Enemy effects.

Fear
The larger your faction the more fear it can garner. Fear seems to be the biggest factor in confederating and can play a sizeble role in defensive and military alliances. The most enjoyable aspect of fear, in my opinion, is extorting money from other factions.

Fear is measured in your land holdings, standing military, economy, and your treaties. In treaties, military alliances garner the most fear, then defensive alliances, but all other treaties from military access to trade seem to garner some degree of fear.

Buddy System
This is a reflection of your diplomatic standings with this factions friends and allies. For instance if you can win a treaty of any kind with Macedon it will have a favorable reflection with Sparta, and Athens. This in turn can win you a treaty with, say, Athens which can then upgrade the treaty with Macedon. That in turn can win you a treaty with Sparta and the circle continues. This can all be done in the same turn.

Enemy of my Enemy
The opposite of the buddy system, this uses the animosity a faction holds for a third party as the foundation for building treaties. To use Macedon in example again, one can likely get a strong treaty by offering to join the war against Tylis. The Enemy of my Enemy effect is also pivotal in performing extortions to generate money once you Fear is high enough.

Tradable Assets
Quite simply, you control a commodity they do not and are not already importing. The more commodities you control the more coveted a trade route with you becomes, and the more proffitable. Ironically the more profitable a trade route is for you, the more the other factions want to sign the treaty. AI factions don't seem to care very much about exporting, regardless of trade value.

Standing Treaties
This functions like a self Buddy System, you are friends and have treaties with this faction; they are more likely to further their relations with you.

Gifts
Last and certainly least, gifts. I view gifts more or less as a break down of the diplomatic process. Never give gifts, the favor you may garner begins to decay rapidly and you recieved nothing in return. You can purchase a treaty however, this is very useful for getting the ball rolling when a Faction is sitting at moderate but just won't sign that first treaty.

Treaties have a hierarchy of value and can be purchased by the diplomatic favor your garner from the 7 factors.

Non-Agression Pacts (NAP) are the lowest tier treaty and quite easy to acquire. They function almost as a backhanded fear mechanic; they cascade. If you get a NAP with faction A, faction B may sign it after previously rejecting it on the same turn. NAPs are influenced heavily by Fear, Standing Treaties, and the Buddy System.

Trade Agreements (TA) fall roughy into the same category as NAPs but run more off of the Buddy System, Tradable Assets, and Standing Treaties. If you sign a NAP with a faction the Standing Treaties effect make bridging the gap to a TA much easier if your Tadable Assests are poor.

Defensive Alliances (DA) are surprisingly easy to sign and also have a cascading effect if you take advantage of the Buddy System effect. Using the Enemy of my Enemy effect is another easy way to get a DA signed, example offering war on Tylis to get a DA signed with Macedon.

Military Access is a bridge treaty to acquring a Military Alliance. Military access boosts the Standing Treaties effect quite a bit and it allows trapped factions to pass through your lands reducing their expansion anxioty. Military access also increases the likelyhood of allies actually helping you. They willl put down your rebellions, repel sieges on your cities, and even patrol your ports.

Military Alliances (MA) are the pennacle treaty. They increase your Fear substially, the Buddy Effect will cause their friends to sign all kinds of treaties, and it will achieve the perameters on milestone goals and victory conditions.

Confederation works well with the Enemy of my Enemy and Fear effects. It has little to no reprocussions.

Setrapies and Client States work in much the same way as Join Confederation, with reprocussions. They tend to drag you into wars early on, tho over time they can become a strong source of income. It should be noted that other faction's Clients and Setrapies will not fullfil your win conditions through your military alliance with the overlord. This can cause problems late game, but with enough fear, the overlord will drop the client when you attack.

~On the first round run or sail your spy to new lands where you think you may be able to sign treaties.
~Try to gain at least one new treaty every single round, especially in the first 10 rounds.
~If you get a new treaty with one faction, factions that previously rejected you may now accept on the same turn. I feel its important to take advantage of the ebb and flow of the seven factors, these ebbs are not confined to change only on a turn by turn basis.
~The Enemy of my Enemy effect is huge in the early game, use it. Going to war with a minor faction 10 provinces away to gain a treaty has zero reprocussions.
~If you offer to join a war in exchange for a treaty the AI will sometimes still reject you. You can manually declare war, then return, they often will sign the treaty then.
~If you are short on money, offer to join a war for money, then turn around and offer peace for money on the same turn. The higher your Fear effect the more lucrative this is. If you already have a MA with the first party this has little to no reprocussions. This works well if the victim is fighting multiple factions.
~If the chance of a faction agreeing to a treaty of any type is high, demand money.
~If you step up your demands icrementallly, the first moderate chance the AI agrees to will be accepted, the secound moderate is almost always rejected, then it goes low afterwards.
~Never give gifts (IE nothing in return) unless you are funding a war you don't want to fight in.