Color steps are used to give your consumer a choice over the colors of your product or a portion of a region of your product as below image.
Garment Color - The color of your jumper, shorts, bottle, phone, etc.
Material Color - What color is the material color of your chair, watch, etc?
This step could be part of the standard workflow available to all or it could be linked as a conditional step by clicking the conditional button at the bottom of the step setting it to only appear when a particular variant in a previous step is selected.
The color step can be used as either, For choosing stocked material colors it is a customization, or when choosing the color of a background to a greeting card it is a personalization as the color will need to be printed.