I believe you can manipulate the colour bleed between pixels on the composite output from a high resolution mode to achieve high-colour output. (They actually have a 1024-colour mode in part of the demo.)

There are probably a bunch of weird limitations on the adjacent colours you can achieve, but it’s an impressive effect regardless!

(Here’s the obligatory wikipedia page: https://en.wikipedia.org/wiki/Composite_artifact_colors It sounds like the demo developers have taken this effect & turned it up to 11.)