But what is the point...

Colonials are generally weaker, but more experienced in rough terrain which seems to give them an advantage. They also suffer less penalties than the Modern or Mercenary .

Colonials are weaker at the start, but over time they can become some of the best units of the game.

Compare sometime a Colonial Infantry at level 4 to a Light Infantry 6 and I think you'll be surprised. Then consider their advantages in many terrains and you will see why so many folks use them.

Then finally consider that colonials are built using only one population, vs the 2 for a regular unit or 3 for a mercenary, then you'll see why they are my unit of choice.