By default, terminals on Linux only use 8 colors (or 16 if setup to
bright variants instead of bold text). Everything else on a
modern computer uses 24-bit color, allowing for millions of colors. More
colors in the terminal would allow for better syntax highlighting and
color output of various commands to be more readable.
In practice, while a few terminals support full 24-bit RGB color (at least Konsole does), it is not widespread enough to be used much. On the other hand, most terminals support 256 colors, which is significantly better than just 8.