Officers spawn on colonies in habitable orbit zones once you have a spacecraft factory and airport terminal on the planet. You get one officer per habitable orbit zone (green circle on the nav) in a solar system. This means you can have up to three officers in a system if it's a trinary system with a habitable orbiting each sun. If the officer dies, a new one will spawn. Officers are usually used to command spaceships, or to act as a first officer for player captains in case they lose connection, log out, or leave the ship. Officers also allow you to order your ship to buy and sell goods through orders. Ships without an officer will not use ship weapon systems to attack or retaliate if a hostile enters range and attacks.
Officers may also be put in command of space stations, allowing you to have more than you normally would in orbit (as normally they do not need officers).
Officers gain ranks through combat experience.