Aha! Now I see why the Terms & Definitions thread suddenly had a couple posts lately! People were commenting about ICS there.
I always knew it as Infinite City Sleaze, but it can also mean I C S______ . It is a valid Civ 2 strategy, like any other. In it's "sleaze" aspect, there is more to it than just placing cities close together and being happy with the worked tiles to citizens ratio. You need Hanging Gardens and a strong understanding of level/civ size/city size computation. In a nutshell, ICS lets you have dozens of size 2 cities without unhappiness...
if you have Hanging Gardens and no military defenders in your Monarchy cities, for instance. It is not limited to size 2; the effect works for other size cities... they key is to bust thru the threshhold to get the black dudes. This is where Sleaze earned it's name, I assume

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It's not intuitive to fully understand... you need to work at it if you want to use it. But in the end, for SP, it is not the best strategy, overall... at least IMHO. However, I'm not a real ICS expert, since I don't play it.
It seems like a valid tactic to me. Does not seem any more sleazy than ship chaining or manipulating the AI (research).
It is a valid tactic. Certain games, like MP, tend to lend themselves better to ICS, from what I understand. Someone may want to research the background of the ICS term, with S as Sleaze... I assume it is rather old, but don't know it's origin. Maybe someone might try Apolyton, or search by the dude Smash referenced.
I beleive the city limit for any 1 civ is 255 cities.
The limit for the grand total of all cities in Civ 2 is limited by an unsigned integer byte, which works out to:
2^8-1=255.
You cannot build the 255th city if you let a single AI city survive as the pet. If you can trap a respawned AI settler (restart on) and prevent them building, you can have 255 cities. You cannot build the 256th in that case.