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Based on their skill level, they reduce crime and empire size from pops, and give a resource output bonus. Additionally their random traits can further help with specialized sectors.
If the sector size was unlimited, you would just have your empire in a single sector run by one super-amazing governor, removing the purpose of an empire substructure. And you would cry if this one guy died at the peak of his skill, and you had no replacement.
You start with your capital sector, which extends into 4 jumps in all directions, not counting the sector capital itself.
Then for any colony outside of this sector, it will be listed under "Frontier Sector" at the bottom. You simply create a sector at any colony in the frontier sector free of costs. It can also be deleted at any point and re-created at another colony.
The only costs are the unity for buying the governor, and his upkeep. The price goes up by (iirc) 50 unity for every additional leader, and they always have 2 monthly unity upkeep.
So there is a general interest to have as many colonies in as few sectors as possible, at least while 200, 500, 1500 unity are expensive.
The resources stay with your empire unless you automate it, but you wont so dont worry. Just make the sectors to assign governors and leave it there. Do all the building and planning yourself, do not let the AI do it. The end.
Building a mineral extractor facility on a planet with just one mining district.
Then of course the crappy automated system is responsible for why there is so many empires fracture with rebel factions because the AI does not even attempt to build a planet with stability and happiness.
The AI will settle any planet no matter what the habitability is which causes huge consumption of consumer goods.
Oh... the AI and its gas refineries. Seriously, what's up with that?
I usually release a vassal sector, in order to form a federation with the weakest possible partner.
And if you give the AI a planet, 20k of every resource, it ALWAYS builds a couple of gas refineries first.
Doesn't matter if you give them one habitat with one pop, or a gaia world with 25 pops, the gas refinery must always be in place before doing anything else.
People starving? Eat gas.
Negative minerals, energy and alloys? More gas!