Faiths. Why? Because 1. it would be interesting and 2. it doesn’t need another reason. This is mostly for if settlers have “happiness” and do things in their free time. If they don’t, there isn’t much point.
Creating a Faith - To found a faith, you first need a prophet. There are multiple ways to get a prophet. Sometimes, a wise person will wander into your settlement. There are many things you can do to him. You could rob him, or force him away, or accept him. If you accept him to your settlement, he will become yours.
After that, you can select him and select “Found Faith”. This will let you create a faith. You select the desired beliefs. There are multiple categories of beliefs. You can only choose a certain number of beliefs, and no more than one from a single category. Some beliefs also contradict other beliefs from different categories. Now, faiths don’t have to be religious or theistic, and some beliefs are completely secular or agnostic. I think it is important to point out that these faiths and beliefs will not provide overpowered benefits. Beliefs that affect something other than the faith itself always have one or more cons, and beliefs that don’t have negative effects generally only affect the faith itself.
Spreading the Faith - Settlers aren’t just going to start following this faith for no reason. You must first convince them by using “missionaries”. Spreading too aggressively will cause unhappiness for those who are not part of the faith, but not spreading at all will cause the faith to flounder. Certain beliefs will increase the spread of the faith, but almost always have a downside. Some increase hostility between faiths, which can lead to them cooperating poorly as a group, while others increase unhappiness of those that are not convinced.
Worship - Settlers slowly lose faithfulness over time. This isn’t good, because the benefits of the beliefs in the faith are dependent on the faithfulness of it’s believers. They regain this faithfulness by worship (or contemplation, or meditation, whatever floats your boat). They do this in multiple ways. For example, they can worship at home, they can do what the faith tells them to do (missionary work, helping those in need, progressing towards a greater goal, or other things depending on the exact beliefs adopted by the faith), or they can worship in a place of worship. Worshipping in a temple/church/mosque/synagogue (or the noodle plate of worship if you are into pastafarianism) is more efficient than worshipping at home, and reduces the chance of the faith splintering, but it obviously quite intensive.
Sects - Occasionally, a sect can form from a larger faith. Sects are almost identical to the original faith, but have a few differences in their beliefs. They are technically still a part of that faith, but that can change. If a sect grows too distant from the original faith, it will form its own faith. Certain beliefs can reduce the chance of a sect forming, but also increase hostility and distance between the original faith and the sect. Other beliefs increase the chance of a sect forming, but greatly reduce the chance of the sect forming its own faith.
Places of Worship - The largest place of worship (that is, the one preferred by most settlers) in a faith will never form a sect. However, the smaller a place of worship is, the more likely most of its members will form a sect. This creates a dilemma. On one hand, you could have a central place of worship which would keep sects from forming, but would also decrease the amount of settlers that have the time or ability to worship in a place of worship, which decreases faithfulness. On the other, you could have many places of worship, which has a large chance of forming a sect, but allows for more people to be faithful.
Personality types - There are five personality types that affect faith. Zealous, Secular, Rational, Materialistic and Benevolent. Zealous settlers prefer beliefs that reward zealotry and devoutness. Secular settlers prefer beliefs that do not infringe on the rights of others to worship as they choose. Benevolent settlers prefer beliefs that are benevolent, rather than those that are malevolent. Rational settlers prefer beliefs that endorse science, and dislike those that are outlandish or unrealistic. Materialistic settlers prefer beliefs that center around physical things rather than spiritual things. Zealous and secular are fairly much polar opposites, but the other personality types get along a little better with each other. These personality types also affect other things. Materialistic settlers make for great craftsmen, rationalistic settlers make for great scientists and engineers, zealous settlers make for great missionaries, priests and warriors, and benevolent or secular settlers do well when it comes to dealing with people.
Conflict - Conflict between different faiths and sects is inevitable. When it happens, both parties become unhappy, and settlers from different faiths and sects work poorly with each other. For example, if three settlers are cutting down trees and they are all in different faiths which detest the others, trees won’t be cut as fast as they could be cut. One option is to make sure everyone is of the same faith, which causes complications, the other is to improve relations between the faiths, which also causes complications.
Official Faith - Choosing an official faith for your settlement increases the rate at which it spreads in your settlement, but also makes secular settlers (even those of said faith), and those of other faiths unhappy, and increases conflict between them. This isn’t just in your settlement, either. Choosing an official faith will make other entities that disagree with your choice very upset with you. For example, a certain pagan society of orcs/trolls/creationists/ogres will think that you are all heretics, and proceed to try to raze your settlement.