“Proper color palette control” refers to the overaching minimalist principle behind pixel art: “How many colors do I absolutely need to get this idea across as an image?” The answer won’t always be immediate or easy. If anything, it’ll only be an answerable question once you’ve reached a point in your work where you can start subtracting colors instead of adding them—if you’re not working with a preëxisting palette, that is. Above all else, remember this: It’s not about how many colors you could use, but how many colors you ultimately need to use. If you need 36 colors for a specific work, cool. If you need less than that, adjust your palette accordingly.

As for “indistinguishable” colors, I addressed something like this in http://pixeljoint.com/forum/forum_posts.asp?TID=26624 - a different thread on this forum . To summarize what I said: Some colors are so close to each other in hue, saturation, and brightness values that they generally can’t be perceived as “different” by the naked eye. As an example, put #FF0000 and #F00000 into https://webaim.org/resources/contrastchecker/ - a color contrast checker . The contrast ratio is 1.1:1, and the text is indistinguishable from the background color. Those colors may technically be different colors, but for most (if not all) people, those colors look the exact same. Making sure you don’t have those kinds of colors in your image is part of proper palette control.