With only two episodes out so far, we can already see that there is a lot going on the HOTD. Apart from the rivalry in Westeros, we notice that trouble is brewing in other parts of the continent as well.
In the beginning of the second episode we see Lord Corlys Velaryon warning about the trouble with shipping. Lord Carlys, along with many other merchants, is losing ships to a pirate called Crabfeeder. Crabfeeder is a Pirate based in the Stepstones who is likely backed by the Free Cities.
This brings us to the question: What are the Stepstones and the Free Cities in House of the Dragon? What are their relations with Westeros? How important are they?
According to legend, the Stepstones are the remnant of the Arm of Dorne, a land bridge which once connected Westeros and Essos. Today, they’re a small chain of islands that are swarmed with Pirate dens.
On their own, the islands are no good for anything. They’re rocky and lack minerals, hence can neither be used for farming nor can be built upon. However, what they have is a strategic location. They’re located between the southern Narrow sea and the northwestern Summer sea.
We know that the trade between Westeros and Essos is flourishing and most of the ships have to pass through the narrow sea. Hence, the Stepstones provide a suitable location to all the pirates who want to disrupt trade and loot the merchant ships. This is the reason Crabfeeder has his base set in the Stepstones, along with many other Pirates.
The nine cities: Braavos, Lorath, Lys, Myr, Volantis, Pentos, Tyrosh, Qohor and Norvos make up the Free Cities. Before the Doom of Valyria, the free cities were the colonies of the Valyrian Freehold. When the Freehold was destroyed, the empire fragmented and descended into a war called the Century of Blood.
Once the war settled, the colonies emerged as autonomous states and came to be known as the the Free Cities – as in free from any foreign rule. In the contemporary times, the free cities control a massive chunk of Essos on the western end and are a huge trading ally of the seven Kingdoms. Hence, the Free Cities contribute to the economy of Westeros.
These cities have been constantly at war with eachother. However, for a brief period, there was an alliance between Lys, Myr and Tyrosh. The alliance came to be known as the triarchy. With their combined strength, the cities became a prominent power in the region.
In episode 2, we saw Crabfeeder sinking Westeroski ships and killing the soldiers, which angered Lord Carlys. He then adviced the King to go after him, but the King was reluctant to use force against Crabfeeder because he assumed that he was backed by the Free Cities.
Even after all that death and destruction, King Viserys didn’t want to wage an open war with Crabfeeder because it could disrupt his relationship with the Free Cities. The reason the Free Cities are so important is because the economy of Westeros is heavily reliant upon trade with them.
Waging a war on them would disrupt the trading relations. It would hit the Westeroski economy badly, and the King’s council knows it. So, even though it’s a battle that the house Targaryen could win, the King does not wish to pursue it openly because it would yield more bad than good.