8-bit color

8-bit color graphics are a method of storing image information in a computer's memory or in an image file, so that each pixel is represented by 8-bits (1 byte). The maximum number of colors that can be displayed at any one time is 256 or 28.
Color quantization.
In order to turn a 24-bit image into an 8-bit image, the image must go through a process called color quantization. Color quantization is the process of creating a color map for a less color dense image from a more dense image. The simplest form of quantization frequently called 8-bit truecolor is to simply assign 3 bits to red, 3 to green and 2 to blue (the human eye is less sensitive to blue light) to create a 3-3-2
8-bit color image, but this process is sub optimal. There could be different groupings of colors that make evenly spreading the colors out inefficient and likely to misrepresent the actual image. Because the color map doesn't need to have every color in it and just needs to accurately represent the more color dense image, an arbitrary color can be assigned to each of the 256 available color 'slots' on the map. Popular approaches for creating these maps include the "popularity algorithm" which chooses the 256 most common colors and creates a map from them. The more accurate "median-cut" algorithm resorts and divides colors to find the median of different color groups resulting in a more accurate final color map.
Usage.
Because of the low amount of memory and resultant higher speeds of 8-bit color images, 8-bit color was a common ground among computer graphics development until more memory and higher CPU speeds became readily available to consumers. 8-bit color was used in many different applications including:
Most notably, the VGA standard for graphical interface uses an 8-bit color. Developed in 1987 by IBM, the VGA interface supported a maximum resolution of 640x480 pixels. Many different image types such as GIF and TIFF use an 8-bit color system to store data.
Even though it is now outdated for most consumer applications, 8-bit color encoding can still be useful in imaging systems with limited data bandwidth or memory capacity. For example, both Mars Exploration Rovers used an 8-bit grayscale format for navigation imaging.
Issues.
Due to the nature of the 8-bit system, most images have different color maps. Since an 8-bit color display can't display two images with different color maps at the same time, it is usually impossible to display two different 8-bit images on the same such display at the same time. In practice, in order to avoid this problem, most images don't use the full range of 256 colors. Another problem comes when doing image processing: whenever two images with different color maps are added to each other, the resulting image has to have a new color map created, meaning another quantization operation has to occur, making the resulting image an imperfect version of the expected result.
8-bit color today.
Currently, most graphics hardware runs in 24-bit truecolor or 32-bit truecolor (24-bit truecolor and an 8-bit alpha channel). However, some remote desktop software (Virtual Network Computing, Remote Desktop Protocol) can switch to 8-bit color to conserve bandwidth. With the comparative low cost and high speeds of modern computers, some image editing is even done in a raw format with anywhere from 12 to 14 bits from each of the camera's image sensor pixels in order to avoid image quality reduction while editing.