Reduce Colors reduces the number of colors used in an image (see chapter 5.7.2).
The resulting number of colors can be one of the following: 64k, 32k, 256, 128, 64, 32, 16, 8, 4 and 2. With 65536 and with 32768 colors PhotoLine does not calculate a color palette. Instead it is reducing the number of bits used per color channel. With 65536 colors the RGB-channels are using 5/6/5 bits, and with 32768 colors they are using 5/5/5 bits.
Of course there is no reason to reduce a bitmap, because a bitmap contains only two colors and fewer colors are not possible.
Color reducing is mostly used by saving images for web use. But it is a useful tool for reducing file sizes, too.
The combo box Color Count controls the resulting number of colors.
Reduction Method allows choosing between Nearest Color, Error Diffusion and different dither methods.
Nearest Color replaces a color with that color from a given palette that looks most alike.
Error Diffusion tries to reproduce the image by mixing the colors of the color palette.
You can choose between different color palettes: Optimized Median Cut, Optimized Octree, Standard and Loaded.
Standard is the color palette used by Windows and most Internet browsers.
Optimized Median Cut and Optimized Octree are creating a color palette from the colors used in the image. Depending on the image one or the other produces the better result.
Loaded uses the palette, that is shown in the color list.
You can load and save a color palette with File.