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It all hindges on the model. With any historical simulation corners will be cut and short cuts made. To be truly realistic as a monarch you would spend a lot of your time involved in mindless court rituals. To relax you get to go hunting with hawks or bows. The invention of fire arms will revolutionalise your life as you now get a chance to shoot the animals as well. However this does not a good game make, your average player craves a little bit more.

Corners will be cut the player will be able to get to do more than your average ruler/country ever could. To give an example as Spain you get use Cortez to conquer Mexico, in reality Cortez buggered off without any authority and before you knew it Spain ruled Mexico. These are the kind of neccesary abstractions you need to get a good game.

However if you can find the right balance between game play and historical restrictions then you get an easier job for any AI. A sensible set of historical restirctions on colonisation will lead to no need for the AI to be told where to colonise.
 
Just to expand on my previous point. Take Colonisation, what I would do is have a colonial range. You can only colonise X distance away from nearest holding. Have this distance linked to naval tech. If you can get this set up right, early in the game if you want to colonise India then you need a chain of colonies/trading posts round Africa to reach there (which is what Portugal in the end actually did). If you set these ranges up correctly it will give the Iberian powers a bit of a head start, and gradually the other powers will be able to get into the act. By the time a county Like Poland has the range to colonise, all the good provinces will be gone. However if Poland was to get an Atlantic coast line it will be able colonise sooner.