The Europa Universalis III deals with religion in a way much like the Civilization series, with each faith having different bonuses associated with it. Since it covers the entire globe, it has an entire plathora of religions, from Chritianity (originally Catholic and Orthodox, but later Protestant and Reformed), Islam (Sunni and Shiite), Buddhism, Hinduism, Confucianism, Shintoism, and "Native" religions. Each different denomination has its own unique bonuses. This was a good way of doing it, especially since the game starts in 1399 and goes until 1820, with the major turning point of the game being the Protestant Reformation. Protestantism and Reformed offers its own bonuses different from Catholicism, but state religious conversion has major ramifications on both the national and international stages. Diplomacy with former brothers in faith becomes strained and your country become more suseptible to internal rebellions until you manage to convert your people to the new religion.
Each nation has its own "official" religion, but each province has its own religion as well. When the religion of a province differs from the state religion, there is the potential for unrest. However, the state can dispatch missionaries to the province to try and convert the people to the state religion.
This makes for an excellent platform for religious wars. Still, it's a little arbitrary. Why does being Catholic gives you an increased chance at colonization while being Reformed increases your trade efficiency?
