As I've stated before what I meant for eastern was people east of Hellas. Native is a more suitable term. The confusion was due to the initial concept being a matter about colonisation in foreign countries by the Hellenistic polities, which incidently expanded eastwards...
The point of the current system is that you are always recruiting from the local population. However you now have the choice/power to implement cultural policies so to speak:
By building a native colony, you allow the locals to keep most of their customs, practices and laws. Thus they generally live as they always had, retaining, among other things, their native warfare...
In such a scenario you would bring your own soldiers to live among them, these in turn generation after generation would establish a new people, which however keeps intact more of the local customs...
You would not be able to recruit factional troops, because you had left political power to the locals and these keep on fighting in their own native manner...
While by building a hellenic colony, you are bringing veterans among the locals, with new laws and generally your own colonists wield political power...
This way you are attempting to acculturate the locals to your own ways. Your veterans train them to fight as your factionals would...
In the end the locals are always being recruited, even if you go with the hellenic colony in a sense your Hoplitai will be Illyrian men trained as such, who had abandoned their former language and culture: they have been thoroughly hellenised...
I hope you can see how much more accurate this is :)
I know a lot has changed and we are currently working on patches, new units and future releases. Eventually in the future guides will be in the fora and make everyone's life easier :D
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