I can't speak for the GameBoy system, but I've spent years hacking on the NES. The way the color system breaks down is you have a palette of 4 colors. From there you can load 4 "background" palettes along with 4 "sprite" palettes at any time. The sprites are things like Mario or a Goomba while the background items are things like the ground blocks or tubes.
For an example of what the palette setup looks like in practice, take a glimpse at this video[0] - Disclaimer: I made this back when I was in highschool and I haven't watched it since, so I may wind up embarrassing myself here...
Yes and no. I've used the forums a bit having asked and answered questions. Most of my hobby was in modifying the games and hardware, eventually dabbling in homebrew development. My name there is the same as it is here, but I haven't used it in years as my career has kept me busy.
