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Our last color space is the least capable color space is the Indexed Color, and we can get to it by making a mode conversion right here, although in practical terms we would rarely do this. If you're making an indexed color image you're making an image that is going to go on a website and it's probably not an image like the one we're looking at here which has a great range of colors and lots of tonal gradations in it. Indexed Color is really only appropriate for working with logos or illustrations that include type where want to retain the crispness of the type, and basically made up of flat colors rather than lots of gradated colors.
And if that were the case you would far more likely go to Save for Web & Devices, where you get a 2-Up or 4-Up comparison of the same image versus its original state and you can compare the different file formats and different amounts of compression that are applied to the image. I'm going to get out of here for now though and take you back to the Indexed Color Mode by using the Mode menu.
And when we do that I'm just going to go with the Local (Perceptual) Palette, we're using the maximum number of colors 256 and we have Diffusion Dithering on. So when I click OK, we can see we get a very undesirable mottled effect where the colors in the original image far exceed the colors in the Indexed Color channel. The one channel that we get as a result and they are simulated with this Diffusion Dithering effect. Other things to note about Indexed Color are that it is 1/3rd the size of an RGB or a lab image, because it has only one channel, and that there is very little that you can do with it in terms of filters, in fact, there is nothing that you can do with it in term of filters.
So it's a very specific file format and you would only use it when you're saving in the GIF or the PNG file format when saving logos or illustrations with flat color for screen.
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