Why are gems different colors?

Answer 1

Because they absorb different wavelengths of light.

Ultimately it has to do with the electronic structure of the material. Many gems incorporate small amounts of transition metal ions, which tend to be highly colored. For example, rubies and sapphires are both composed primarily of corundum (a particular type of aluminum oxide). The red color of rubies comes from chromium impurities, and blue sapphires derive their color from a mixture of titanium and iron.