Advantages
Indexed color saves a lot of memory, storage space, and transmission time: using truecolor, each pixel needs 24 bits, or 3 bytes. A typical 640×480 VGA resolution truecolor uncompressed image needs 640×480×3 = 921,600 bytes (900 KiB). Limiting the image colors to 256, every pixel needs only 8 bits, or 1 byte each, so the example image now needs only 640×480×1 = 307,200 bytes (300 KiB), plus 256×3 = 768 additional bytes to store the palette map in itself (assuming RGB), approx. one third of the original size. Smaller palettes (4-bit 16 colors, 2-bit 4 colors) can pack the pixels even more (to 1/6 or 1/12), obviously at cost of color accuracy.
Indexed color was widely used in early personal computers and display adapters' hardware to reduce costs (mainly, fewer then-expensive RAM chips) but also for convenient image management with limited-power CPUs (of the order of 4 to 8 MHz), file storage (cassette tapes and low density floppy disks). Notable computer graphics systems extensively (or even exclusively) using pseudocolor palettes in the 1980s include CGA, EGA, and VGA (for IBM PC compatibles), the Atari ST, and Amiga's OCS and AGA.
Image files exchanged over the Compuserve net in the early 1990s were encapsulated in the GIF format. Later, the HTML web pages used the GIF along with other indexed color-supporting file formats such as PNG, to exchange limited-color images quickly and store them in limited storage space.
Most image file formats that support indexed color images also commonly support some compression scheme, enhancing their ability to store the images in smaller files.
Interesting colorized and artistic effects can be easily achieved by altering the color palette of indexed color images, for example to produce colorized sepia tone images. Due to the separate nature of the associated palette element of the indexed color images, they are ideal to remap grayscale images into false color ones through the use of false color palettes.
Simple video overlay can be achieved easily through the transparent color technique.
By manipulating the color hardware registers (Color look-up table or CLUT) of the display adapter in the indexed color graphic modes, full-screen color-animation effects can be achieved without redrawing the image - that is, at low CPU time cost; a single change of the register values affects the whole screen at once. Color-map animation is extensively used in the demoscene. The Microsoft Windows boot logo screen in Windows 95, 98, ME, and 2000 Professional (which uses VGA 320x200x256 color display mode because it is the greatest common denominator on all PCs) employs this technique for the scrolling gradient bar across the bottom of the screen; the picture is a static image with no pixels rewritten after it is initially displayed. Custom boot screen images could tap the cycled colors to animate other parts of the images.
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