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It uses the time of arrival to determine where a particular reflection came from, but it can also observe the intensity of that reflection to determine reflectivity.

You could easily generate a colour image by using a red, green and blue laser sequentially. But... they haven't done that. It's all black and white so I don't know why you think it can see colour?

I think the mouseover text on the color picture is a mistake. The article labels the blurry grayscale image as a reconstruction and the color image as a regular image.

The two panels in the README are a single image, which is why they share the mouseover text.

Not color, but reflectivity.