Distance in GalCiv 2 is measured in parsecs (abbreviated pc). Ship range uses a different measurement called sectors (sct).
A parsec is essentially 1 tile on the map, and is used to describe ship speed and sensor range. The parsec used in GalCiv 2 differs from the parsec used in modern astronomy. A "true parsec" is 3.26 light years, but the "adjusted parsec" in GalCiv can vary widely due to the various levels at which space can be "folded" to facilitate FTL travel. Large masses (such as stars and planets) limit the efficiency of these forms of travel, thus travel within star systems is MUCH slower than interstellar travel, and thus the parsecs are smaller there. The map displays represent the effects of this variable "foldability", and thus are not to scale in the physical sense.
A sector is one "square" of the mini map, usually delineated by green lines. A sector is 15 parsecs to a side. It is used to describe ship range and is more general than parsecs. Though displayed this way on the maps, 1 sector does not necessarily equal 15 parsecs. For instance, a ship that can travel 1 sector from its home planet can fully explore the entirety of any sector that borders the sector its home planet is in, regardless of where within that sector the home planet lies, potentially travelling 29 parsecs from the home planet (if that planet were right at the farthest edge of its sector). A starbase's area of influence is limited to the sector in which it is built (even if built at the edge of a sector).
(Created using information originally posted by Avatar Draginol on the GalCiv forums on October 2nd, 2005 - Original post)
Ships range is restricted to a set distance from the nearest colony or starbase you own. To increase range, add Life Support modules to your ships or create starbases in the farthest reaches to supply your ships. Be aware there's a hard-coded range limit of 7 sectors.