My understanding is it ensures proper contrast for all cells regardless of the type of fg/bg color (palette, 8 bit, 24 bit). So if a program uses 24 bit fg color and a bg from palette (or a default one) it would still preserve the contrast. (haven’t tested, just my impression from reading the docs)
I've never actually made a palette, but it just doesn't seem practical to me to expect theme creators to always find a contrast-safe 16 colour palettes. I would imagine that it even seriously restricts the range of themes that can be made. I can imagine that such a thing is possible for smaller palettes like say 3 colours though, but then that's not actually useful for UIs.
I think the fact is that small palettes come from the days of lower resources, not from efficient program design.
There are already plenty of 16-colour palettes available. Literally thousands of them. And it takes all of about 10 seconds to search for “$TERM theme”.
The problem isn’t the lack of themes. The problem is CLI/TUI developers who think their random pet project is more important than their users accessibility needs and colour preferences.
