The xml files contained in the colors/ folder contain the different colour themes for the skin. This allows you the skinner to define the colours that you'll use for text + images once in terms of english names (rather than hex codes) and potentially allows you to have different colour themes.
Each additional colour theme has a single .xml file, where the filename should be the same as the name of the colour theme (eg. orange.xml). The default colours should be placed in defaults.xml - this is a fallback file that is used when the user hasn't requested another colour theme, or when their selected colour theme doesn't contain a particular colour assignment.
The layout is as follows (note that the hex code is in ARGB format):
<colors> <color name="white">ffffffff</color> <color name="grey">7fffffff</color> <color name="green">ff00ff7f</color> </colors>
You can then use <textcolor>white</textcolor> within the main skin files to refer to which colour you want. This allows you to easily change all the colouring in the skin by just adding a new .xml file to the colors/ folder.