Quoted from Dmod:
Actually it's more than that... We preserve all the grayscale information.
On WPC and Whitestar there are 48 possible colors per frame (16 hues x 3 nonzero levels).
For SAM there are 192 possible colors per frame (16 hues x 12 nonzero levels).
We currently support 4 unique palettes in each game but this is easily expanded. No game has needed more than 4.
Sorry, didn't mean to under-sell the colorDMD like that. I ASS-U-ME-d that the smartDMD was doing a similar thing with tinting the exisitng dots.
However, just from looking at the screenshots, it looks like the PinballBrowser coloring is just color in place of dot - not a tint to the existing brightness. Which would make the "palette for every frame" thing much more necessary as the various shades you want to use would have to be in the palette, rather than already in the dot data. So you could probably get similar looking results the SmartDMD way, but you'll be making a ton more unique palettes to compensate for losing the brightness levels.