I've read about the new feature, Constitution and Government types, and it seems like more democratic governments get certain type of bonuses, same how Constitutional Monarchy gets tier 1 buffs:

Collective Security
Inclusive Institutions
Democratic Peace Theory

Republic gets the same but tier 2.

In my opinion, the third level of democracy would be People's Republic, which runs on the basis of Direct Democracy.

It would have no mayor/nation leader, everything (including alliances, sieges, declarations of wars, embargoes, etc) would be done with referendum,
Nation staff would be elected same as in Republic (same as nation leader), but they would not have a power to start a war, join an alliance, and so on, only to start a nation-wide referendum if the nation wants to join an alliance, start a war, etc.
Same with nation taxes and bunch of other things.

Towns could function on the basis of direct democracy too, and their decisions would also be made on collective basis, decision such as if they join or leave a nation, the tax percentage, the tax type (or if there will be any taxes at all) etc. as well as who is the selected representative that would start those referendums.

The voting members could also choose to start a revolt against an occupation, to become a peaceful or non-peaceful town, etc.

I would also add unrests, which would be like revolt sieges, but on a smaller scale. Unrest lasts untill one or the other side scores 5000 siege points, and removes occupation for a week on defender victory. Non-Soldiers can participate in unrests, the siege banner is always the town home block and who spends more time on it, gains more points.

Killing protesting players or holding the town home block would give points to the occupying forces but also reduce diplomatic points for each kill making it a difficult decision to use force or not.

Upon defender defeat, the town can be plundered.

Peaceful Towns can start an unrest.