Okay another amateur hour post , this one is about colours (colors) , colour modes and the meaning of the gobbledegook in colour settings . In computer colour depends on the intensity of red blue and green. Outside computer according to my ordinary level science colour is visible light. If i remember correctly what our eyes interpret is a byproduct of the reflection or absorption of light that hits an object (Basic Physics or Biology I think). The colours that humans can see or the colours that can be seen by humans are the Visible spectrum.
Any way moving onto something that is connected to multimedia authoring .

Colour modes:

The best way to describe a colour mode is by giving examples. Color modes repetitive in multimedia include;
RGB colour mode
CMYK or CMYB colour mode
Indexed Colour mode
Gray Scale Color mode
Bitmap colour mode

And  there is Lab, Duotone, Multichannel but I won’t talk about them. The most familiar model among the above would be the RGB (stands for Red Green Blue) colour mode which is used to display colour by display screens of electronic devices. Colours in this model are additive that is they are a product of addition of other colours (that is addition of Red Blue and Green) called primary colours.
Proportion or amount of each primary colour added defines the end result.

Red + Green + Blue  =white;
Red + Green              =yellow;

The next model which is a result of addition of RGB colours in equal proportions is the CMYK (Cyan Mangenta and Yellow) the K represents Key (black) This model is used in printing. The difference between CMYK and RGB is that CMYK is subtractive.
That is colours are printed by reducing the percentage of each primary ink (colour).
A clear example is that to get white in the RGB colour model we need to have 100% (255) of each primary colour while in CMYK getting lighter colours or white will require 0% of each of the four inks (colours).
Greyscale and bitmap colour modes:
Bitmap has images with a depth of one bit, black or white. Greyscale on the hand has three colours black white and grey (gray) and image have depth of  8 bit. The gray is basically what differentiates Greyscale from bitmap because it can be  in different shades ranging  upto 256 shades of gray.
Lastly but not really last is the Indexed colour model that produces 8 bit images with upto 256 colours. As you can see the range is not that high. This model is used in web pages because it has a reduced file size and still maintains multimedia presentation standards. Mostly image editing is done before images are converted to Indexed colour.

Colour notation:
RGB colors.

Colours are represented using numbers from 0 to 255 ( 256 )  meaning we can derive over (256 x 256 x 256) colours. For those familiar with HTML have used  the  hexadecimal representation which has  a # infront  eg (#000000).
The notation follows an ordered list of Red Green Blue ( like a tuple for those farmiliar with lists in programming).

R        G     B
(256,   0 ,  0) = Red
The hexadecimal equivalent of this is:
(Remember hexadecimal equivalent of three place value decimal base number is two place values means 255 will be represented in a pair FF )

R     G       B
# FF  00    00
Written without the spaces as #FF0000;

R        G     B
(192,   192,  192) = Grey
The hexadecimal equivalent of this is:

R     G       B
#C0 C0    C0
Written without the spaces as #C0C0C0;
More Examples at w3schools.com under Colours.

Before ending colours I would like to add two more terms:
Pantone Matching System: standard mostly recognized colour matching system for printing etc. More on the Pantone wikipedia page.
Gamut: range of colours that can be produced by a process device such as printing etc. Gamut can be be better understood after familiarity with color spaces. However right now the best way to see a gamut is as a subset of the colours that can be produced.
For example pure red is viewed as out of gamut in CMYK (or CMYB) but in gamut in RGB  becuase CMYK. This can be seen clearly through changing colour modes in your multimedia authoring program eg photoshop Red in CMYK is duller and not pure.

Now I think setting colour settings and colour working spaces will be easier for more go to the online help manual for the program your using.