There appears to be a lot of confusion over what it means. Many people seem to think it just indicates that the surrendering party is defeated.
This is not the case. It indicates a transfer of control; the surrendering party gives something over to the conqueror.
Here are a number of links to online dictionaries explaining what the word means.
Probably the clearest definition in the military context is from Merriam-Webster.
2 a : to give (oneself) up into the power of another especially as a prisoner
b : to give (oneself) over to something (as an influence)
intransitive verb : to give oneself up into the power of another : yield
As you can clearly see, the word surrender means transferring power and control over yourself. A surrendered alliance is not sovereign.