AGS supports scaling of characters, where the character can appear to get smaller as he walks away from the screen. Character scaling is supported as part of the walkable areas in a room.

The reason why you have multiple colours available for the walkable areas is because you can set a zoom level for each colour, which defines how large the character will be while he is in that area. The default for all walkable areas is 100%, ie. full size. However, you can adjust it using the "Walkable Areas" mode to anywhere from 10% (one-tenth size) to 200% (double size).

The scaling settings can effect all characters and objects in the game. For characters, it is on by default but you can disable the scaling for an individual character by setting the "UseRoomAreaScaling" option in that character's properties.

For objects, it is off by default but you can make a specific object obey scaling levels by setting its "UseRoomAreaScaling" option.

If you set the "UseContinuousScaling" option, then rather than just specifying a zoom level for the whole walkable area, you specify a min and max zoom level. These specify the scaling at the top and bottom of the walkable area. When the game is run, AGS will interpolate these values to make the character smoothly scale down from one value to another as he walks towards the back or front of the screen.