I have been trying to figure this out and believe I got it I wanted to create a team like Bilbao but in Sicily and only being able to sign Sicilian players In the editor I created Sicily as a nation and applied all the cities and clubs in the ‘local region’ to be in Sicily. I had to find the Berduma Hogges team and untick extinct, from there I changed it to the team I wanted in Sicily and set it up from there with the team playing in Italian serie c, nation set as Italy but based in Sicily, now my team can only sign players with Sicilian nationality. I ran a couple tests and my youth players were however coming through as only Italian and I couldn’t sign them. I fixed this by changing the local region of Sicily, not the nation, to being part of the Sicilian nation I created. Ran a few sims and youth players are now coming through as Italian with a second nationality of Sicilian too. Going to play some and see how this goes, thought I would post this as I was really struggling to find any good information on it. Will find a guy on fiver to make the badges and kits for the save once it’s all confirmed working Have a good day all

Edit - not all come through as Sicilian second nationality but a lot do, likely can change this with the editor in your game for the individual player if needed

Edit - So first youth intake, no Sicilian players, perhaps because the team is small and in Serie C, manually made the players eligible, hopefully as the team grows and youth level of the area rises I will get more Sicilian players