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(colour look-up table, CLUT) A device which converts the logical colour numbers stored in each pixel of video memory into physical colours, normally represented as RGB triplets, that can be displayed on the monitor. The palette is simply a block of fast RAM which is addressed by the logical colour and whose output is split into the red, green and blue levels which drive the actual display (e.g. CRT).
The number of entries (logical colours) in the palette is the total number of colours which can appear on screen simultaneously. The width of each entry determines the number of colours which the palette can be set to produce.
A common example would be a palette of 256 colours (i.e. addressed by eight-bit pixel values) where each colour can be chosen from a total of 16.7 million colours (i.e. eight bits output for each of red, green and blue).
Changes to the palette affect the whole screen at once and can be used to produce special effects which would be much slower to produce by updating pixels.