Most manufacturers ranges have a huge number of colours. It would not be desirable to create designs that use all these colours so the program allows you to select a number of colours for each design.
The number of colours you can use in a design varies according to the edition of the program. The standard professional program can use up to 75 colours while the others allow up to 220 colours. These figures include one colour for the background cloth.
Our software does not use the standard 256 colours for a very good reason. On 256 colour systems, Windows reserves some colours for system use - drawing title bars, windows, backgrounds etc. To use 256 colours on these systems would require that these reserved colours are used even if they did not match the thread colours exactly. This reduces the accuracy of the colours in the program leading to differences between what you see on the screen and what you get when you stitch the chart. This would not be acceptable.