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Here's my guess: it's using a pure black-and-white 3 × 3 pixel grid at 100 pixels per inch on a 300-pixel-per-inch display, along with a 3-way color filter on top. That would be 2^9 + 2^3 = 2^12 = 4096 colors. The pure black-and-white pixels let the device use its A2 animation mode, which explains why the refresh rate is fast enough even for color animation.
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