Since 24-bit color has a palette of millions of colors and 8 and 16-bit color have much less, the 24-bit image must be dithered when it is viewed on a system equipped with 8 or 16-bit color. Dithering simulates the colors from the original 24-bit image that are not available in the reduced palette of the 8 or 16-bit system. Dithering creates smooth, natural looking gradations of color, especially on photographic images, rather than the sharp edges that can result from a reduction of palette colors. 

The graphic below illustrates the concept of dithering. The green color in the rectangle on the 24-bit color photograph at the left does not exist in the 256 color palette in the computer on which the photograph will be viewed. The color must be simulated with the use of colors that are part of the computer system's color palette. In the picture below, the computer uses dots of a blue color and a yellow color from its palette and places the colored dots adjacent to each other. The dots are so small and close together that the eye will not focus on the individual dots, but will merge them, and see the area as being the green color shown in the photograph. The dots being so small and close together also creates a larger file size because instead of storing blocks of solid colors, the file will contain hundreds of different colored dots in the dithered areas, which causes the file to be much larger.