I think some kind of color reduction filter is applied. Then palette is extracted from an image and saved to DB. Also it seems that they are saving amount of pixels filled with a colors from a palette.
Good idea. But I think there should also be some jind of "approximate" search. e.g. user selects #ff05AD and image contains 80% of #ff05AE which is actually nearly the same colour…
Of course you should use quantization first for both image searched and the parameter color you are searching for. It’s described in various captcha breaking techniques.