How does Terraforming work in Eminent Domain?
The Terraforming action states:


  Add this card to a planet as 2 colonies. If that fulfills the printed Colonize cost, Settle that planet.
  Note: Ignore Colonize discounts in your Empire.


As far as I understand, the following occurs:

Firstly, you can play it onto an unsettled planet to count as two colonies (much like playing a Colonize counts as one).

In addition, if once you've played it the planet has sufficient colonies to settle, you can settle it immediately (discarding the Terraforming and any other Colonizes and flipping the planet).

e.g. If you have an unsettled planet with a Colonize cost of 3 and one Colonize card already on it, you can play Terraforming to double-Colonize and then immediately settle that planet.

For Terraforming, all discounts are ignored, mostly for game-balance.

i.e. In the same example as above, if you had an unsettled planet with a Colonize cost of 3 and NO Colonize cards on it (but a discount to Colonize from, say, another planet) then you could double-Colonize, but you would NOT be able to immediately settle, since you do not reach the requirements while ignoring discounts. You COULD however settle it later without further Colonizes required, since the action remains on the planet and still counts as two colonies.