The palette manager is part of your operating system's display subsystem. Most video hardware can distinguish between 262,144 different colors, but cannot display all of them at once. Palette manager mediates requests for colors and decides which colors are shown on the screen at any given time. Most 256-color display drivers support palette manager.
If your computer can display more than 256 colors at a time, you have a deep color video system. Deep color systems don't use (or need) palette manager.
Palette manager also provides color animation.