What you are used to seeing, all available territories in green, is a normal distribution where both players select from the same available territories.
There are also distributions that allow for several teams. A good example would be http://warlight.net/SinglePlayer?PreviewMap=8457
Have a look at the Four Castles A,B,C,D distributions.
If you were to choose the "Four Castles" distribution, you would see only a single castle with green territories during the distribution stage. The others would all be brown.
This is NOT a custom scenario, as Cheery Dog pointed out. It's just a normal distribution for several teams.