Color depth refers to the maximum number of colors an image can contain. Color depth is determined by the bit depth of an image (the number of binary bits that define the shade or color of each pixel in a bitmap). For example, a pixel with a bit depth of 1 can have two values: black and white. The greater the bit depth, the more colors an image can contain, and the more accurate the color representation is. For example, an 8-bit GIF image can contain up to 256 colors, but a 24-bit JPEG image can contain approximately 16 million colors.
Usually, RGB, grayscale, and CMYK images contain 8 bits of data per color channel. That is why an RGB image is often referred to as 24-bit RGB (8 bits x 3 channels), a grayscale image is referred to as 8-bit grayscale (8 bits x channel), and a CMYK image is referred to as 32-bit CMYK (8 bits x 4 channels).
Regardless of how many colors an image contains, the image displayed onscreen is limited to the highest number of colors supported by the monitor on which it is viewed. For example, an 8-bit monitor can display only up to 256 colors in a 24-bit image.