*sigh* My point was that the "copper" allowed you change the video (be it resolution, palette, depth) "on-the-fly". You still had the limit of 32 colors per scanline (if we ignore the extra-halfbrite mode), but you usually had more than that on-screen because all the tricks going on with the "copper". It even allowed you to mix video modes like 320x200x32 with 640x200x16.
One of the more visually appealing tricks of the copper was to produce smooth color gradient backgrounds. However in the early demo days, the demo programmers were just getting familiar with the copper, so most color gradients came out with glaringly obvious banding. That's what your image was reminding me of... (Woof...more bad English).