Teamcolor is a special area in models, such as a building's flag or a warrior's shield where the color is that players's unique player color. This is the color that appears on the minimap as well as is used to ensure units of different players can be recognized as so. When creating mods, all units should have teamcolor at least somewhere, and it should be noticeable to ensure that players can distinguish their units from an ally's or enemies units. The teamcolor in Glest is the alpha-channel (transparency) of the textures.
Toggling teamcolor or transparency
The usage of teamcolor or transparency is toggled in the G3D properties section, under the Object Data tab of the Properties window.
You can select a different transparency behavior for every blender mesh object. Thus you can have a cape that uses teamcolor and a sword that uses transparency by making them different objects.
In the model's texture, transparency (which will require that you have the texture saved in a format which supports transparency, either TGA or PNG) will be replaced as teamcolor.