In terms of government, what is incorporation?

Answer 1

It's the formation of an official local government. Incoporated places (cities, boroughs, villages, townships, etc.) can pass their own laws (like no cell phone use while driving), have their own court, provide or arrange for local services (such as police or road maintenance) and levy their own taxes (such as a property tax).

Answer 2

Incorporation (abbreviated Inc. in U.S. business names) is the forming of a new corporation. The corporation may be a business, a non-profit organization or even a government of a new city or town. This article focuses on the process of incorporation, see also corporation.