That was how the predecessor 8088 MPH worked.
Area 5150 however is aimed at a TTL RGBI monitor, and as such, does not use NTSC composite artifacting. It can only display 16 colours at once. So in this demo, you get 640x200 in 16 colours, where additional colours are implied by using dither patterns.
(Technically 8088 MPH did more or less the same, except these 'dither patterns' would result in NTSC artifact colours).