A trade zone is a contiguous set of provinces whose trade posts are controlled by the same patrician family. Silk Road trade posts (in this case, controlled by the same ruler) can form a trade zone as well.
The value of the trade zone is based on the income and holdings in the provinces with trade posts. Trade zone value also receives a large bonus from being connected to the republic's capital. Trade zones give a bonus to city income (not castle or temple income) and trade post income.
For trade zone purposes, control of a sea province is determined by which family owns the most trade posts pointing into that sea province. If there is a tie, the sea zone is considered neutral: no family owns it, and no trade posts can be connected through it. If the sea zone is controlled by a family, all trade posts in adjoining land provinces are connected, regardless of port locations.
Trade zones scale super-linearly, such that it's better to have a single 6-province trade zone than two 3-province trade zones.
Patrician family trade zones can be viewed by clicking on the trade zone map mode and then clicking on a republic while holding down the Ctrl key.
Disease spread
With 
Reaper's Due DLC, trade zones can help spread epidemics. Wealthy rulers should consider fortifying their trade zone provinces with upgraded hospitals.
Trade Zone Bonus
Cities and trade posts within a trade zone receive a percentage bonus to their tax income depending on the trade value (TV) of the trade zone. Increasing trade value provides diminishing returns as the bonus will approach 100% as the Trade Value approaches infinity. Note that this bonus is halved for cities.
Trade Zone Bonus = (TV * 100) / (TV + 200)
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