Colour Depth
Colour depth is the calculation of the number of bits used to store colour for each pixel in an image.
A higher colour depth means more colours which creates a higher quality image with a larger file size.
A lower colour depth means less colours which creates a lower quality image with a smaller file size.
Colour Sample Comparison
The two images are the same size but one is made up of 256 colours, the other is made up of 8 colours.
256 Colour Depth
The image using 256 colours has more colours available. As a result, the image looks far higher quality, smoother and has more detail.
It has a higher colour depth, so it also has a larger file size.
8 Colour Depth
The image using 8 colours has only a few colours available. As a result, the image looks washed out and has less detail. Parts of it also look grainy.
It has a lower colour depth, so it also has a smaller file size.