I used to think the reason early CGA games made such poor use of the meagre four colours available to them was because they were all designed by artless nerds with thick, coke-bottle glasses. While that may be true, it's still only half the story.
Since most PCs at the time were connected to television sets instead of RGB monitors, clever developers would take advantage of imperfections in the TV-out to mix colours directly on the display device. Dithered black and magenta, for example, could be smeared into either solid red or solid blue, with which one you got coming down to the specific dithering pattern used.
Here's the title screen from Ultima II, courtesy of
Wikipedia's article on artifact colours:
Left: RGB. Right: composite. My mind: fucking blown.