How exactly would we handle there being millions of nations? Personally I think the only real outcome of this would be eternal grimdark warfare. The more factions you have the exponentially more conflicts will can arise, especially if they're all crammed in a relatively small territory together. More factions means more disagreements, yes, but it's actually a lot worse than that since each group has more potential rivals and ideologies that don't match its own, meaning it gets EXPONENTIALLY worse with uncountable small alliances simultaneously competing with almost every other alliance, which presumably would lead to polarization, radicalization, xenophobia, and isolationism. Honestly I think there's two inevitable conclusions to this; extinction, or a war of unification. Either someone eventually employs weapons of mass destruction causing MAD, civilization breaks down from constant resource strains from war and everyone continues fighting afterwards until they go extinct or somehow get over their differences, or a Great Crusade begins when one faction finally gets fed up with the constant fighting and forces everyone to join them or else. However even the unification war has problems because you could get multiple simultaneously and just end up with slightly less factions that are even more violent and vastly more dystopian. Although isolationism is also an option, but I doubt enough factions would choose to leave into some isolated region of space to actually make a difference, and those that do would probably get chased by their enemies.