Also known as bit depth, color depth refers to the number of colors that can be represented by a display.
Basically, an LED Display is composed of three main colors– red, green and blue, and their color shades. In every color, 2 to the power of N (number of bits used) gives the number of shades. While maximum number of colors can be calculated through multiplying the number of shades achieved per color.
8 bits is used for every color of an LED Display. Thus, the color depth is 24 bits and the total number of colors is calculated as follows:
Number of shades: 2⁸ (2 x 2 x 2 x 2 x 2 x 2 x 2 x 2) = 256 shades
Number of colors: 256 x 256 x 256 = 16,777,216 or 16 million colors