A bitmap with an optimized palette is one where the colors in the bitmap have been chosen carefully to make the bitmap look as good as possible. Optimized palette bitmaps with 256 colors will usually look as good as the 24 bit equivalent (one with millions of colors) when you display them in a screen mode with millions of colors. If you display an optimized palette 256 color bitmap in a 256 color screen mode it will look as good as one with a browser palette, but will look far better in screen modes with more colors.