Color is notoriously evasive. Red can be warm, but also fierce. Blue is sometimes comforting, but sometimes cold. Despite plenty of effort, we still aren't able to set rules for the use of color, or codify its effects on us. The only thing everyone seems to agree on is that color matters.
We can define color physically. Color in a video display, or on a monitor like the one you're looking at now, is made from a combination of three primary colors: red, blue, and green. With the technology available today, a typical computer monitor can display millions of colors—more than the human eye can distinguish. In print, color is usually made by mixing four transparent inks: cyan, magenta, yellow, and black. Add to those custom-made inks (Pantone, or "PMS" inks being the most common) and we can print virtually any color imaginable.
But just how to use color in design remains a more subjective matter. Most people respond emotionally to color on one level or another, so color is rightly considered an important design consideration. Some have tried to find scientific laws for our responses to color; some try to predict which particular shade of green or orange will be hot next year. In the end, the use of color in design is not subject to rules like these. Color is too fluid, too changeable, too dependent on context.
So how to use color? In a very complex subject like this, there are two general areas that are useful to consider when making these decisions. The first involves consistency in color use, and the second has to do with contrast between colors.
If your goal is to create a recognizable identity, color can play a big role in a number of different ways. You might choose specific colors to associate with your organization. Most people know that Coke is red, ABC is yellow, and IBM is blue. But variation can in itself become an identity. Maybe each of your products is a different bright color, like Apple's iMacs. Or maybe you build an identity on using pairs of complementary colors. Or a range of pastels. The idea is to establish some kind of color standard, and stick to it. People recognize color patterns without even thinking about it. They'll learn yours too if you're consistent in your visual marketing.
Even more so than patterns, people respond to differences in light and dark in a visual display. High contrast is useful, but so is low contrast. They speak in different ways. They are also both very flexible in themselves. High contrast might be seen as: bold; strident; hard; stark; joyous; factual. Low contrast may seem: soft; vague; subtle; sophisticated; temperate; weak. Which is appropriate? As with most questions of color usage, the answer depends on the context.