I just saw a video of an octopus changing its colour to match the rocks near him. How is this information processed (I’m assuming that octopus saw the colour of the rock and then had its body change its colour)? Can they recognize and identify colours?
To add more context to Arthur2’s answer, we still don’t fully understand how cephalopod camouflage works. The working theory is they use chromatophores (special cells that contain pigment (color)) and the ability to change the color depending on the muscle tensions.
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