I believe (that is, I'm happy to be corrected) that this allows you to specify which faction skin the unit appears in as long as the faction skin already exists.
So, as in the example above, you can tell the Julii to have their Iberian Infantry in Spanish rather than the default Carthaginian colours. However, they couldn't have Iberian Infantry in Briton colours because the .tga and .spr files wouldn't exist.
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