What significance did color have in the theater during Shakespeare's time?

Answer 1

There is a legend that the colour of the flag raised over the theatre told potential customers what kind of play would be performed. The problem is that the plays did not fit neatly into categories, and they knew it. Shakespeare mocks the categorization of plays with Polonius's line "the best actors in the world, either for tragedy, comedy, history, pastoral, pastoral-comical, historical-pastoral, tragical-historical, tragical-comical-historical-pastoral". There does not appear to be any contemporaneous account on which the coloured flag legend is based, and it is likely a later invention.

Apart from that, the costumes used were very colourful, but that did not usually have significance, unless the characters were wearing black as a sign of mourning (as Hamlet does, and Lady Anne in Richard III).