Color image processing involves two main areas: full-color processing where images are acquired with a color sensor, and pseudo-color processing where monochrome intensities are assigned colors. The document then discusses color fundamentals including the visible light spectrum, how humans perceive color, primary/secondary colors, and color models like RGB, CMY, and HSI. It explains how to convert between RGB and HSI color spaces, with HSI being more intuitive for describing colors to humans. Pseudo-color processing is described as mapping gray levels to colors to enhance image details.