It's not smoke and mirrors. It's akin to the audio world where the final product (an CD or MP3) is mastered in 16 bit audio, but is mixed and edited at a higher bit depth, often 32 bit.
In the color world, most of ones job is about mapping what a sensor captures (most modern DSLRs are 12-16 bits per channel) onto the reduced palette offered by 8 bit color. Actually, most cheap displays are 6 bit color with some fancy techniques to help fool our eyes.
Research banding and dithering with respect to color to get a better idea of the subject.
In the color world, most of ones job is about mapping what a sensor captures (most modern DSLRs are 12-16 bits per channel) onto the reduced palette offered by 8 bit color. Actually, most cheap displays are 6 bit color with some fancy techniques to help fool our eyes.
Research banding and dithering with respect to color to get a better idea of the subject.