Understanding Indexed Color

In this mode, pixels are not assigned color values directly.
Instead, the colors values are stored in a palette,
also known as a CLUT or color look-up table,
which may contain up to 256 colors.

Each pixel references a color (or swatch) on the palette.

Here are some sample palettes:

Note that palettes may contain less than 256 colors,
but to achieve more than 256 colors requires a different color mode,
such as RGB.