Pokémon Red and Blue had a color motif for its cities, which almost literally manifested in the overworld visuals of Celadon City, as it was planned to be rainbow colored during the development of the games. The Kanto region as a whole had a color theme, with its Pokémon League being the Indigo League. All of its cities were also named after uncommon colors, save for Pokémon's Pallet Town, which references a painter's palette, where colors are mixed together.
The other cities in the Kanto region are named after colors. Viridian is blueish green, pewter is blueish grey and silver, cerulean is a dark shade of blue, vermillion is bright red, lavender is pinkish purple, celadon is pale greenish-blue, fuchsia is a mix of purple and red, saffron is a bright shade of yellow, and cinnabar is a mineral with a bright red and orange hue. These colors match the cities well, as Pewter city is the home to the Rock/Ground-type Gym Leader Brock, Cerulean is home to the Water-type Gym Leader Misty, Lavender Town is the home to Ghost-type Pokémon, Fuchsia is home to the Poison-type Gym Leader Koga, and Cinnabar Island is home to the Pokémon Red and Blue's Fire-type Gym Leader Blaine.
Celadon City is home to the Grass-type Gym Leader Erika, who gives the Rainbow Badge upon being defeated. Celadon City is also referred to as the "City of Rainbow Dreams". The Japanese name for Celdadon is Tamamushi, which is the name of a beetle that has iridescent wings, where the color changes depending on the angle of the light. There was a time when the developers of Pokémon Red and Blue took this naming convention seriously, by giving Celadon City its own rainbow.
Pokémon Red And Blue - Celadon City's Lost Rainbow
A leaked copy of the Pokémon Blue source code emerged online in 2020, which happened around the same time as an earlier build of Pokémon Gold and Silver leaked online. According to The Cutting Room Floor, there is a piece of unused code in the development files of the game that would enable a unique color palette in Pokémon Red and Blue, assuming the game wasn't being played on an original Game Boy. Once activated, the code creates four vertical colored lines across the screen, going from yellow, to red, to green, to indigo. This code only works within the boundaries of Celadon City, tying it to its rainbow theme.
It's unclear why this effect wasn't implemented into the final version of Pokémon Red and Blue. It's possible that the developers thought it would be distracting, as the hue follows the players wherever they walk. Celadon city has appeared in several remakes following Pokémon Red and Blue and the rainbow hue is nowhere to be found, so maybe the developers just tried the idea out and felt that it didn't work.
Source: The Cutting Room Floor