You have two tab folders in the Color Palette dialog. One to select the palette you want to use and one to interact with the palette that you select.
Within the Select tab, you will see small thumbnails of all available palettes. There is also information about the number of colors in the palettes and their names. You can choose a palette for direct usage by simply clicking on it and shifting to the Palette tab. You can edit the palette you selected by clicking on the edit button which will bring up the Color Palette Editor dialog. Note that you can also edit a palette in the Palette tab folder, but the Color Palette Editor gives more options.
Within the Palette tab, you interact with your palette. The primary usage of the dialog is, naturally, to choose colors from the palette.
It is very cumbersome to use the color selector to choose colors when you work with a project. The best way to work is to have a color palette.
You can, however, also use this window to edit the palette. Right click (and hold) on a color cell and a menu will appear. Within the menu you can edit the color in the cell, delete the cell, or create a new cell which will be added in the bottom row of your palette. The name which appears when you either right or left click on a color cell can also be changed. All changes that you make in the palette will be autosaved and available immediately.
The Zoom buttons enable you to zoom in and out in the palette.
Default Keyboard Shortcut: Ctrl-P