I'm going to have to agree with Ubik and the other posters here who disagree with the current colonization system (at least the one in the demo). While I understand the more random event and more ahistorical approach the developers are taking with EUIII (and don't get me wrong, that's fine), with colonization the ahistorical nature of the game seems to cross that line into fantasy. Fantasy because you have lanlocked countries, or very small countries that could in no way be able to colonize the certain areas they have in the game. While I do like their efforts to make the game ahistorical, there needs to be a balance. As some people said, you can still have the game be ahistorical with colonization, but you also need to keep it realistic (i.e: countries that could realistically be able to colonize those areas should be able too, landlocked isolationist countries shouldn't be grabbing land thousands of miles away).
It takes away from the game too much, plus, in my experience, maps were given out too much. And while people can argue that the widespread map knowledge was a fact back in EUIII time period (which is ironic, people defending an ahistorical fantasy system with HISTORICAL facts...), I still shouldn't see Brandenburg colonizing West Africa. That's a physical impossibility at that time. Also, the AI jumps on the colonization about a day after the area is explored, so it's like a race with the AI to see who can get what.
What I'd like to see is restrictions on the colonization (at least at the beginning) to more realistic settings (as I said before, to countries that could actually colonize at that time period). But, I have no qualms with those colonizing countries choosing different areas (if Spain wants to colonize Brazil, fine.) I just don't want to see Switzerland in Cuba.