Settlers are sent to the empty Kingdom Squares with "Colonisation" mission in order to found a new city.
In order to launch the mission you need to have:
Amount of initial resources that you will have in the new city depends on the mission speed. The slower the speed is, the more resources will be in the new city.
If the square where Settler was sent unfits for city foundation or there is some unexplored by you object (Outer Domain or Ruin) on the square, the Settler’s mission will fail. In such case the Settler can be sent to another square but it is recommended to explore squares before sending a Settler to them.
Pay attention to Terrain Bonuses when choosing square for new city foundation.
The new city can be named at the first entrance or later inside the Main Building.