The color screen can be used to pick a color that you wish to use to represent your guild. This color is displayed on various guild related screens and may be used in conjunction with your guild symbol/icon.
To pick a color simply click on the color you wish to use.
Guild Colors
There is an item called Guild Colors which can be gained from the Guild Quest/Reward NPC at 31, 58 in Knotwood Valley. This item is a special item that as well as having a cool equipable bonus effect provides a seconday feature. If you use the item from your inventory after acquiring it your character will then be set to use your current guild color, this means when you are walking around the world if another player sees you they will see your name in that color.