Color 16
Each color within LDraw has a number. Each such number aims to "mimic" one of the LEGO colors. There are 2 exceptions: Color 16 and Color 24.
James Jessiman add these special color numbers to be able to colorize parts in any color he wants.
Assigning the color 16 to a part (and 99% of all official parts do so) means for software operating on that part that the software can pick the color and replace color 16 everywhere with that chosen color. This is the key and core mechanism of the LDraw parts library which gives it its signature property of being able to create parts of any color you can imagine. Without color 16, that would not be possible in that easy way.