Palette reduction is a process used in digital imaging to decrease the number of colors in an image. This technique simplifies the color palette, making it easier to store and display images, especially in environments with limited color capabilities. By reducing colors, the image can maintain its essential features while using less memory. This method is commonly applied in graphic design and web development, where file size and loading times are crucial. Tools and software often utilize algorithms to analyze the image and select the most representative colors, ensuring that the overall appearance remains visually appealing despite the reduced palette.