I think you are reading too much into this.
Basically from what I can tell the colonial stuff is meant to help level out your population. This helps prevent your very large cities from growing out of control and revolting. In vanilla I can remember having to let a town revolt so I could retake it and reduce the pop. This helps to eliminate that broken mechanic.
As far as where the "population" goes, it doesn't go anywhere. It's just an abstract to represent your population going to an "off map" colony.
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