> I don't like tying territory to biome types, I think most or all of my cities would fail that check.
Historically borders usually follow natural boundaries. Rivers, mountains, and forests are big ones. Allowing settlements to claim a couple adjacent regions would mitigate the biome-straddling issue. But I think there's a balance to be had there.
A major benefit of settlements occupying regions, I think, is the ability to tie into the idea of territorial possession. Maskling behavior, settlement expansion, and diplomacy could all interact through that system.
> Some buildings may ignore territorial ownership, instead allocating labor by raw proximity and availability. These would possibly include roads, mines, hunting/lumber camps, towers, etc.
I've been pondering a possibility of different types of regions claimed by a settlement. One idea was a split between the "core" regions (where anything could be built), outlying regions (where only farms, small towers, mines, and the like could be built), and harvesting regions (where settlers could cut down trees and gather pigs). That plan really depends on how large the regions end up being.
Edit: thanks for the post, some really thought provoking discussion going on in here