In computer graphics, a palette is a finite set of colors. Palettes can be optimized to improve image accuracy in the presence of software or hardware constraints.

Terminology
An adaptive color palette expanding from 2 colors to 256 colors, demonstrating how the image changes (click to see animation).
Depending on the context, the term palette and related terms such as Web palette and RGB palette can have somewhat different meanings. The following are some of the widely used meanings for palette in computer graphics:

The total number of colors that a given system is able to generate or manage (though, due to video memory limitations, it may not be able to display them all simultaneously):
full palette: For example, Highcolor displays are said to have a 16-bit RGB palette.

The limited selection of colors that can be displayed simultaneously:
On the whole screen:
fixed palette selection: A given display adapter can offer a fixed color selection when its hardware registers are appropriately set. For example, the Color Graphics Adapter (CGA), in one of the standard graphics modes, can be set to show the so-called palette #1 or the palette #2: two combinations of 3 fixed colors and one user-defined background color each.
selected colors or picked colors: In this case, the color selection, generally from a wider explicitly available full palette, is always chosen by software, both by the user or by a program. For example, the standard VGA display adapter is said to provide a palette of 256 simultaneous colors from a total of 262,144 different colors.
default palette or system palette: The given selected colors have been officially standardized by some body or corporation. For example, the well known Web-safe colors for use with Internet browsers, or the Microsoft Windows default palette.

On an individual image:
color map or color table: The limited color selection is stored inside the given indexed color image file. For example, GIF.
image palette or image colors: The limited color selection is assumed to be the full list of the colors the given digital image has, even when the image file does not employ indexed color pixel encoding.
The underlying hardware that may be used to hold those simultaneous colors:
hardware palette or Color Look-Up Table (CLUT): In order to show them, the selected colors’ values must be loaded in the color hardware registers of the display subsystem. For example, the hardware registers of the Commodore Amiga are known both as their color palette and their CLUT, depending on sources.

GUI palettes
An arrangement of a limited set of user or system colors that can be chosen. In such cases, the expression color palette or user color palette are common equivalents. This usage resembles a true artist’s palette.
A tool palette, a rectangular area, called a palette window, of the application screen with buttons, icons or another GUI controls available for quick command or symbol access; if the user is able to place it anywhere by moving it through a mouse or similar pointing device, it is known as a floating palette. A palette for choosing colors can be also a floating palette.

Master palette
An application can, in turn, show many different image thumbnails in a mosaic on screen. It is obvious that the program cannot load all the adaptive palettes of every displayed image thumbnail at the same time in the hardware color registers. A solution is to use a unique, common master palette or universal palette, which can be used to display with reasonable accuracy any kind of image.

This is done by selecting colors in such way that the master palette comprises a full RGB color space “in miniature”, limiting the possible levels that the red, green and blue components may have. This kind of arrangement is sometimes referred as a uniform palette. The normal human eye has sensibility to the three primary colors in different degrees: the more to the green, the less to the blue. So RGB arrangements can take advantage of this by assigning more levels for the green component and less to the blue.

A master palette built this way can be filled with up to 8R×8G×4B = 256 colors, but this does not leave space in the palette for reserved colors, color indices that the program could use for special purposes. It is more general to use only 6R×6G×6B = 216 (as in the Web colors case), 6R×8G×5B = 240 or 6R×7G×6B = 252, which leave room for some reserved colors.

Then, when loading the mosaic of image thumbnails (or other heterogeneous images), the program simply maps every original indexed color pixel to its most approximated in the master palette (after dumping this into the hardware color registers), and writes the result in the video buffer. Here is a sample of a simple mosaic of the four image thumbnails using a master palette of 240 RGB arranged colors plus 16 additional intermediate shades of gray; all images are put together without a significant loss of color accuracy:

Adaptive palette
When using indexed color techniques, real life images are represented with better fidelity to the truecolor original one by using adaptive palettes (sometimes spelled adaptative palettes), in which the colors are selected or quantized through some algorithm directly from the original image (by picking the most frequent colors). This way, and with further dithering, the indexed color image can nearly match the original.

But this creates a heavy dependence between the image pixels and its adaptive palette. Assuming a limited 8-bit depth graphic display, it is necessary to load a given image’s adaptive palette into the color hardware registers prior to loading the image surface itself into the frame buffer. To display different images with different adaptive palettes, they must be loaded one by one, as in a slideshow. Here are samples of four different indexed color images with color patches to show their respective (and largely incompatible) adaptive palettes:

Transparency in palettes
A single palette entry in an indexed color image can be designated as a transparent color, in order to perform a simple video overlay: superimposing a given image over a background in such way that some part of the overlapped image obscures the background and the remaining not. Superimposing film/TV titles and credits is a typical application of video overlay.

In the image to be superimposed (indexed color is assumed), a given palette entry plays the role of the transparent color. Usually the index number 0, but other may be chosen if the overlay is performed by software. At design time, the transparent color palette entry is assigned to an arbitrary (usually distinctive) color. In the example below, a typical arrow pointer for a pointing device is designed over an orange background, so here the orange areas denoted the transparent areas (left). At run time, the overlapped image is placed anywhere over the background image, and it is blended in such way that if the pixel color index is the transparent color, the background pixel is kept, otherwise it is replaced.

This technique is used for pointers, in typical 2-D videogames for characters, bullets and so on (the sprites), video titling and other image mixing applications.

Some early computers, as Commodore 64, MSX and Amiga supports sprites and/or full screen video overlay by hardware. In these cases, the transparent palette entry number is defined by the hardware, and it used to be the number 0.

Some indexed color image file formats as GIF and PNG natively supports the designation of a given palette entry as transparent, freely selectable among any of the palette entries used for a given image.
The BMP file format reserves space for Alpha channel values in its Color Table, however currently this space is not being used to hold any translucency data and is set to zero.

When dealing with truecolor images, some video mixing equipment can employ the RGB triplet (0,0,0) (no red, no green, no blue: the darkest shade of black, sometimes referred as superblack in this context) as the transparent color. At design time, it is replaced by the so-called magic pink. The same way, typical desktop publishing software can assume pure white, RGB triplet (255,255,255) from photos and illustrations to be excluded in order to let the text paragraphs to invade the image’s bounding box for irregular text arrangement around the image’s subjects.

2-D painting programs, like Microsoft Paint and Deluxe Paint, can employ the user designated background color as the transparent color when performing cut, copy, and paste operations.

Although related (due to they are used for the same purposes), image bit masks and alpha channels are techniques which not involve the use of palettes nor transparent color at all, but off-image added extra binary data layers.

Software palettes

Microsoft Windows
Microsoft Windows applications manage the palette of 4-bit or 8-bit indexed color display devices through specialized functions of the Win32 API (for Highcolor and Truecolor display modes, such functions lack any interesting functionality). These APIs deals with the so-called system palette and with many logical palettes.

The system palette is a copy in RAM of the color display’s hardware registers, primarily a physical palette, and it is a unique, shared common resource of the system. At boot, it is loaded with the default system palette (mainly a master palette which works well enough with most programs).

When a given application intends to output colorized graphics and/or images, it can set their own logical palette, that is, its own private selection of colors (up to 256). It is supposed that every graphic element that the application tries to show on screen employs the colors of its logical palette. Every program can manage freely one or more logical palettes without further expected interference (in advance).

Before the output is effectively made, the program must realize its logical palette: the system tries to match then the logical colors with physical ones. If an intended color is already present into the system palette, the system internally maps both the logical and the system palette indexes (due to they rarely coincide). If the intended color is not present yet, the system applies an internal algorithm to discard the least used color in the system palette (generally, some used by another window in the background) and substitutes it with the new color. Due to there are limited room for colors in the system palette, the algorithm tries also to remap similar colors together, and always by avoiding redundant colors.

The final result depends on how many applications are working with on screen colors. The foreground window is always favored, so windows at background may behave in different ways: from become corrupted to quickly redraw themselves. When the system palette changes, the system triggers a specific event to inform every application. When received, a window can quickly redraw itself using a single Win32 API function. But this must be doing explicitly in the program code; hence the fact that many programs lack in manage this event, and their windows become corrupt in this situation.

An application can force the system palette to be loaded with specific colors and even in a specific order, tricking the system by telling they are color entries intended for animation (quick color changes of the colors in the physical palette at specific entries). The system cannot assume then that every hardware palette entry is free for their palette color managements, and those entries are excluded from its algorithm. The final result depend on the skills of the color forcing program and the behavior of the other programs (the lasts exactly as in the regular case), and that of the operating system in itself.

Source From Wikipedia