To get easy trading?
As it stands, distance between faction bases is only factored in how long it takes you to get there. I'm sure this will change in the future, but currently there really isn't a reason not to settle near a friendly faction unless you want to handicap yourself.
Other than if you want more of a challenge? No, not really.
As far as I can tell, there are currently no downsides.
As goldenpotatoes has said, this has the potential to change in the future, so enjoy it while you can :)
What about settling next to a pirate base? How often can you raid them for weapons and medicine?
Quote from: Hans Lemurson on May 10, 2017, 02:50:54 AM
What about settling next to a pirate base? How often can you raid them for weapons and medicine?
Once you've raided a pirate base, it's destroyed forever.
Quote from: NinjaDiscoJew on May 10, 2017, 01:54:28 PM
Quote from: Hans Lemurson on May 10, 2017, 02:50:54 AM
What about settling next to a pirate base? How often can you raid them for weapons and medicine?
Once you've raided a pirate base, it's destroyed forever.
Assuming you actually destroy it. Partial raids, or stealth raids, were definitely a thing for a while in early A16. I think A17 has some changes to make that more difficult (FOW over buildings, f'rex) so I don't know how well it works in A17; I'm not much of a raider.
As far as I know, trading with settlements which are nearby means you don't sell your good for as much. Doesn't matter too much, I don't think, it's usually sheer quantity of stuff that you trade which determines how much silver you bring home.
Yes.
Caravans can't pop into occupied hexes. So settle one over from a friendly faction, instead of right next to them.
Well, as far as gameplay, you could always have a berserk colonist hit one of your neighbor's in the face or have a "hunting" accident and shoot one, they won't be friendly for long after that incident.
That said, I've only had that happen a dozen or so times since I started playing.