Yes, but with 16 colors I can work miracles, look, my catziger art only has about 8 colors or something like that.
There are techniques to perform miracles in 256 sprites, there are several games that are in 2 colors and they are beautiful.
Have you seen this one? take a look, by the way it's pretty good, it's only in 2 colors, they are geniuses at pixelart, the game is pretty good. There are some, i share with you:
Whos lila
https://store.steampowered.com/app/1697700/Whos_Lila/
World of horror
https://store.steampowered.com/app/913740/WORLD_OF_HORROR/
Pony Island (this one maybe u will love, is bizarre, is weird, is amazing!)
https://store.steampowered.com/app/405640/Pony_Island/
There are many others too, but as you see, these are examples that can be maded with the right pixel art tech. I master this tech, but i only use it as a last resort on my art (this technique is named "dithering").
I love the way they used this Dithering technique in Lila. It is done amazingly well but don't you need a bigger canvas size than 128x128 to have it look this beautiful ( like in Lila)? Their canvas size looks very big to me(maybe double of that).
I added all of those to my wishlist, thank you!
You do not need a specific canvas size to use the technique, it can be used in any size.
In lilac they used a canvas, I imagine it was 1280 x 720, so it was probably a job that took months. It was very hard to make that game, but it's total genius.
But it is proof that wonders can be done in 2 colors, you just have to figure it out.
I have all of these on my wishlist too, ur welcome, all these are pretty amazing.