Any colour displayed on a monitor is actually made up of three tiny dots behind the front of the glass screen. The colours from these three dots combine to create millions of different colours and shades. Although the monitor is capable of displaying millions of colours, it's dependent on the graphics adapter which has to control the electronics in the monitor.
Colour bits the number of bits used at each pixel location to represent the colour of the pixel. One colour bit allows the pixel to display two colours, two colour bits can display four colours, eight colour bits can display 256 colours, 16 colour bits can display 65,000 different colours and 24 colour bits can display 16 million colours. Full colour or true-colour displays that can show photographic-quality images usually use 24 colour bits. There is a trade-off: the more colour bits you use for each pixel, the more memory used. The number of colour bits that is used depends on the capabilities of the graphics adapter fitted in your PC. This has a limited amount of memory and can allocate this either to higher resolution, or a display with more colours. A display with 24 colour bits will take three times as much memory as one with eight colour bits.