How color management works

A color management system reconciles the differences between the color spaces of different devices. It translates the RGB or CMYK values in a document so that the colors will be represented as consistently as possible on different devices.
Managing color with profiles A. Profiles describe the color spaces of the input device and the document. B. Using the profiles' descriptions, the color management system identifies the document's actual colors. C. The monitor's profile tells the color management system how to translate the numeric values to the monitor's color space. D. Using the output device's profile, the color management system translates the document's numeric values to the color space of the output device so the actual colors are printed.
For a color management system to perform this translation process, it needs three elements:
Profiles
Describe the color spaces of the different devices and also the color space of a document. A color management system needs separate profiles for each device and a profile embedded in a document. A device profile does not change the color values in a document, it tells the color management system how a device interprets the color values in a document. A document's embedded profile defines the documents' working space if you preserve the profile when opening it in Photoshop. Photoshop also lets you convert or discard the embedded profile, which uses the working space specified in the color settings. The working space tells the color management system what the RGB or CMYK values mean as you work on the document in Photoshop. For more information on working spaces, see About working spaces and for more information on using profiles, see Calibrating and creating profiles.
Color reference
Enables the color management system to identify the colors in one color space. These absolute colors can then be mapped to the same or closest matching colors in another color space. Photoshop's color management system uses Lab for its color reference.
Color Management Module (CMM)
Does the actual conversion of color values in one color space to the same or similar color values in another color space. There are many different CMMs. The default CMM for Photoshop is Adobe (ACE), which is also used by Adobe Illustrator, Adobe InDesign, and Adobe Acrobat.
When Photoshop opens an image, the Photoshop color management system reads the profile if one is embedded in the image. The profile describes the color space of the document so the color management system can interpret the color values in the document. If the image came from a camera or scanner, the device may embed the profile in the image, which explains to the color management system how that device created the image's colors. Images from other sources might have profiles embedded in them that describe their colors according to a previous version of Photoshop or another person's working space. If no profile is embedded, you have the opportunity to assign a profile to that image. Most likely you'll want to assign your current working profile.
After reading the profile, the color management system then identifies all the colors in the document using a color reference. Using the monitor's profile, the color management system translates the document's actual colors into the color space of the monitor so the colors are properly displayed.
When it comes time to print the document, the color management system references the output device's profile so the color values in the document are successfully converted to the output device's color space. Inevitably, there will be colors that are not within the gamut of the output device. In Photoshop, you can determine how the color management system handles the color conversion and out-of-gamut colors by specifying a rendering intent. For more information on rendering intents, see Handling colors with a rendering intent.