Color tags are used to group products of the same color together. When you add or edit a product, you can assign one of the pre-defined color tags to it – just tap the desired color:
When choosing a color for a product you can see a few most frequently used products from each category, so you can immediately understand what you have in this or that group.
When you change the color of a product in a list or in the product dictionary, please note that this change will be applied to all your lists. I.e. if you had, for example, Milk marked red and then changed its color to blue, the Milk color will turn blue in the product dictionary and in all the lists you have Milk in.