It could do more colors at once than Nintendo. But it was severly limited other than that. It's sprites were monochrome. Colors were either on or off to make shapes. Though the different sprites could be different colors.

Skeleton isn't like Resedent Evil. It's first person. But it's a static background that just changes to show side passages. It's kinda hard to explain really. Kind of how a cube made of glass would look if you looked through the sides. You could see the lines that formed the shape, but it doesn't move or anything. And the skeletons are still objects drawn at three different sizes from three different angles. As I said, nothing like modern games, or even 8-16 bit games on other systems. But it works great on Atari.