Twelve-foot tree showing six colors in yard display
Six Colors

CTCL

Color Declarations

Color declarations consist of the identifier define_colors followed by a list of colors, one to a line. Example:
define_colors
  red
  blue
  green
This list must contain all colors that will be used in blocks of lights. "Peripheral" decorations such as bushes need not have designated colors since it is assumed that each such decoration will have just one outlet associated with it. (Sometimes there might be, say, a two-color wreath, in which case you simply call it e.g. green_wreath and red_wreath and don't try to get fancy or sophisticated.)

Six colors seem to be the practical limit, unless you want to paint a few hundred individual light bulbs by hand. There are also software limitations, but since you have the source code, you can fix the algorithms so as not to overflow the edges of the ports.

The colors are in exactly the same order as the strings of lights in the outlets. It is usually most logical to go from dimmest to brightest or vice-versa, as in blue, green, ... , white, so that some of your choreography becomes just a smidgen easier.