In Europa Universalis II, a colony is a type of settlement that has less than 1000 population. It is partially settled, but not yet regarded as a city. The owner cannot build any city upgrades (though it is possible for it to contain a fort - even though you cannot build one), troops, or ships there, but can do more colonization to increase its population. If the colony is in Europe, it can be used to recruit mercenaries, even though it cannot build troops normally. The owner may also attempt religious conversion, although this is usually a waste of money, since further colonization will itself convert the colony.