Regular palaces transform the entire circle (the thing with a number in it, the number indicating the population size) into a star. See Amsterdam, below, for an example. The white star indicates Versailles or Forbidden Palace.
Yeah, axident's got it right:
White Star= Center of Government (i.e. Forbidden Palace, Versailles)
Population Number in Star= Capital of Civ
In the Religious Advisor's screen, a gold star after the City's name denotes Capital, while White Star means the same thing. Gold Star to the upper right of a religious icon indicates the holy city of that religion.
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