I played a game hosted by somebody half my level, during territory picks the ones I couldn't choose are brown, host said he didn't know how he did it either. Can somebody explain how I can do this?

http://wiki.warlight.net/index.php/Custom_Scenario
Also it unlocks at lvl 46
The Brown is what your opponent(s) can pick, but not you. equally they see what you can pick as brown.

Some maps also have those areas pre-existing - which would be the link you're not to confuse custom scenarios with on the wiki.

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.

It was a Europe map and the host was only level 11.

http://warlight.net/Map?ID=5602 European Borders with the territory distrubution as Regions, Corners or WWII?

Those would give you brown squares where they can choose.
(although WWII is the only one that would actually matter as the others all only have 1 territory for each slot)

Post a game link please. You are making it hard for people to figure out without an example.

Well, what you're trying to figure out is that you picked a distribution mode with certain sets of territories only assignable to certain teams. This is called a scenario distribution.

For Example:
http://warlight.net/SinglePlayer?PreviewMap=1734
Has War of the Rings (A) and War of the Rings (B)

If you were to have A, B, C, D, etc... only your available picks are green, and the rest are brown. So, in an example of 4 starts, each with equal territories, you would have 25% green, 75% brown... noone else would have the same green territories as you (Except your teammates)