The human eye is a marvelous thing. A human eye has three types of cone cells, each of which can distinguish 100 different shades of colour. This puts the number of colours at around 1,000,000, although colour perception is a highly subjective activity. Colour-blind people (dichromats) have only two cones and see 10,000 colours, and tetrachromats have 4, and see up to 100 million colours. There is at least one case of a person with tetra-chromatic vision.
Of course the true number of colours visible to human eyes is truly unknown, and some people may have better perception than others. The CIE (Commission internationale de l’éclairage), who in 1931 established the “CIE 1931 XYZ color space”, created a horseshoe-shaped colour plot covering the hue range from 380-700nm, and saturation from 0% at the centre point, to 100% on the periphery. The work of CIE suggests humans can see approximately 2.4 million colours.
Others postulate that humans can discriminate about 150 bands between 380 and 700 nm. By changing saturation, and brightness, it is possible to determine many more colours – maybe 7 million .
This puts the human visual system in the mid-range of colour perception. Marine mammals are adapted for the low-light environment they live in, and are monochromats, i.e. they perceive about 100 colours. Conversely, on the other end of the spectrum, pentachromates can see 10 billion colours, e.g. some butterflies.
Now in computer vision, “true colour” is considered to be 24-bit RGB, or 16,777,216 color variations. Most people obviously can’t see that many colours. The alternatives in colour images are limited. 8-bit colour provides 256 colours, and 16-bit which is a weird combination of R (5-bit), G (6-bit) and B (5-bit), giving 65,536 colours. Can we perceive the difference? Here is a full 24-bit RGB photograph:
Here’s the equivalent 8-bit colour photograph:
Can you tell the difference? (Except for the apparent uniformly white region above the red and yellow buildings).
 Goldstein, E.B., Sensation and Perception, 3rd ed. (1989)