8-Bit is the color depth. Just means you're selecting from a palette of 256 colors.
It is the actual 8-Bit systems that limit to 4 colors per sprite, of course the limited processing power of those systems would make anything more than that impractical.
It is the actual 8-Bit systems that limit to 4 colors per sprite, of course the limited processing power of those systems would make anything more than that impractical.