There is the verb "settle", which can be followed by a prepositional phrase which coincidentally has the preposition "in". And then there's the idiom "to settle in". They mean different things, though they're linked.
And this all is made more exciting for everyone involved by the fact that the word "settled" is a politically difficult word that is still being used in history texts.
In general, the word "settle" means "to make orderly and calm". For instance, there is an idiom "settle down!" which is something a parent or teacher might shout at his unruly children.
"Settle" was used (and in some parts of the world, still is) to refer to people moving into an area, claiming lands as their own -- often lands that until then belonged in some sense to some other people. To "settle" land was to domesticate lands that were seen as "wild" until then, perhaps because they were not being farmed, or because previous inhabitants' claims were (in characterizing the land as "unsettled") being discounted as illegitimate. Hence the term "settler" can be a very political term, implying an opinion about the legitimacy of various parties' claims to that land.
The idiom "settle in" means to compose oneself for a stay of long or indefinite duration. It can mean "get comfortable", it can mean "get situated", it can mean "become calm in a way which indicates one is not going away."
When we speak of a territory being "settled", as in your example, we use the first definition, one where the region is being "calmed" and organized into farms, and made no longer "wild". A territory, unless it is being conceived of as having agency and a propensity for going somewhere*, is not going to "settle in", because the territory isn't the visitor/new arrival, the territory isn't going to make itself at home, the territory isn't doing anything but lie there being the ground and having new people wander over it. (Furthermore, the idiomatic expression "settle in" is intransitive; it can't be made passive. Even if the territory was doing the settling in, this wouldn't work.) This is why we don't say: "This territory was settled in in the mid 1850s." (WRONG)
But the settlers, themselves, they sure did "settle in", in the idiomatic sense. They showed up, made themselves at home -- indeed made themselves homes -- and did the things they needed to stay.
So: a territory is settled, but territories don't usually settle, nor do they settle in. Only settlers (and other people and beings with agency) can settle in.
* Counterexample: "Once the police asked that all residents stay indoors, Watertown and the surrounding communities settled in to wait for the manhunt for the Marathon bombers to play out." You can use geopolitical regions as synecdoche for their inhabitants, and inhabitants can "settle in". Any other use of "settle in" for a geopolitical region had better involve flying cities, e.g. "Much to the surprise of everyone on both sides of the Channel, Laputa materialized off the coast of Dover and now, five weeks on, seems to have settled in for the season."