I think I read somewhere that the game won't let more then 18 civs on a map, so if your playing a huge map with 18 civs how do you handle colonies? Can you just not make them?

Is that even true? I've never tried.

The game .dll files limit the number of civs per game ( dead + alive ) to 18, so a 18 civ game can't have colonies ( I believe that the fist button nver appears )
If you want to play +18 civs, search the creation and costumization forums for a 34 version of the dll file or for a mod that uses it ( I believe that both exist )