From Academic Kids
In biology, a colony (from Latin colonia) means several individual organisms of the same species living closely together, usually for mutual benefit, such as stronger defences, the ability to attack bigger prey etc. Some insects (ants, for example) live only in colonies. Another example is the Portuguese Man o' War, a colony of four different polyps.
Colonies were probably the first step towards multicellular organisms during evolution. The difference between a multicellular organism and a colony is that individual organisms from a colony can, if separated, survive on their own, while cells from a multicellular lifeform (e.g., liver cells) cannot. Volvox is an example for the border between these two states.
Colonial Organisms are single-celled Organisms that live together as a single unit. (Source: Delbridge, A. The Macquarie Dictionary Revised Edition, 1981, Maquarie Library, Dee Why.)
See also clonal colony