Heretic

In the real world, the word "heresy" is a christian term for people who follow Christianity, but not a major orthodox sect thereof. People who believe and spread heresy are deemed "heretics". For example, in the early times of Christianity, the Arianist sect was deemed heresy due to the fact that it claimed that Jesus was a separate entity from Yahweh, and not his son.

Heretics in M2TW

In M2TW, heretics randomly spawn where there is heresy (particularly if there is a lot of it), and increase the amount of heresy that is followed by the people as a religion. Heretics are agents. You can order your holy-men (priests or imams depending upon your faction) to denounce (thereby killing) heretics by right clicking on them while a holy-man is selected. Doing this has a chance of simply not working or even converting your holy-man to a heretic. This is based upon the piety of both your holy-man and the enemy heretic. You want your holy-man's piety as high as possible, and the enemy heretic's piety as low as possible, so as to avoid the denouncing failing, or worse... your holy-man becoming a heretic.

Heretics work similarly to witches in general. Denouncing heretics can give your priests traits that improve piety... although if you get a trait for denouncing heretics, you can easily lose it from failing to denounce heretics too many times.

Heresy is the religion of the rebel faction. However, the rebel faction does not have to worry about public order, so it is irrelevant. There are no buildings that spread heresy.