Each colony is a single planet. It has a certain number of tiles available to build improvements on, which is represented by its Class rating. It may have a special bonus associated with it, like a Shielded World's additional resistance to invasion, or may have one or more Trade Resources present. Individual tiles may also have tile bonuses that increase the level of improvements built on and adjacent to them. Each colony can sponsor one shipyard to construct starships, and simultaneously build one social improvement or project.
Every planet is assigned a class, from 0 (uninhabitable) to 26 (paradise). The number designates how many tiles are available for housing improvements.
Improvements are buildings that increase the output or defense of the colony in various ways. Some, like Factories, multiply the manufacturing output by a certain percentage. Others, like Meditation Centers, don't increase output directly, but boost Approval, which then increases growth and productivity. Military improvements like the Champions Temple make the planet harder to conquer by increasing its resistance to invasion.
Some improvements require a galactic resource to construct and will consume that resource until they're demolished. These improvements have higher payoff, however. For example, the Durantium Refinery gives a +2 manufacturing adjacency bonus, as well as providing one raw unit of manufacturing itself.
One-per-empire improvements like the Hyperion Shipyard are expensive, but give unique bonuses like giving all ships created by the shipyard this planet sponsors a boost to hit points.
Colony capitals cannot be moved or demolished, but provide a +1 adjacency bonus to all types of improvements.
Certain technologies allow special Terraforming improvements. These potentially allow you to unlock new tiles for development, assuming there is land available for such development.
Tiles and improvements can be destroyed during planetary invasions, whether or not the invasion is successful. The likelihood of this happening depends on what invasion tactics that are used by the aggressor.