Monkey İsland RPG Curse of monkey island style

[Gilbert]

Famicom uses 8x8 2bpp tiles/sprites and colour 0 of each pixel is transparent (for sprites; for background tiles it's always shown as the colour 0 of the first background subpalette). Thus each pixel in a sprite can only have 1  transparent colour and 3 solid colours.

You're not always limited to this for your characters and stuff in a game though. As I mentioned you can use overlaying to create more colourful graphics (Rockman is a very good example), at the expense of using more sprites, since the hardware can only display 8 sprites in a row simultaneously. If you break this limit flickering (or stuff disappearing, which is considered bad programming by some) occurs.

In some games, especially RPGs where characters/monsters are static most of the time, stuff are usually drawn as background tiles. In such case people may even put one or two sprites on top of the background to make them more colourful. DQ4 certainly did this (possibly in DQ2 and 3 as well, but not in DQ1). I think FF3 might do this as well as its enemies were mainly backgrounds. (Note that from what I see in Mobygame's screenshots, I'm certain that the player characters have 3 solid colours only, as the background colour is black, which would create the illusion that the characters having an additional black colour for their outlines).

Another usual way of making stuff more colourful, is that say if a character is 16x16 pixels in dimension you can apply different subpalettes to the 4 8x8 (or 8x16 depending on the mode used) sprite cells used, which is what you described in your post (unfortunately due to the stupid design of the PPU subpalettes are assigned to every 16x16 blocks in backgrounds, and that's one reason most Famicom games have maps assembled by distinctive 16x16 blocks).