My first computer was a TRS-80 Color Computer which had a tiny set of badly chosen colors!

Back then you did what you could with graphics and it wasn't a lot. After I got a PC I had indexed color for a long time and working with indexed color was pretty rough because anything physics-based like rendering or raytracing was going to be difficult. You could render a photo pretty well with 256 carefully chosen colors and dithering but if you wanted to, say, composite two photos and do general sorts of things you'd need to convert to "true color", do the math there, then re-quantize for display.