The screen can be considered as a piece of graph paper and the higher the resolution - the greater the number of squares.  In graphics the squares are called pixels (short for picture elements)  and screen sizes vary between 640 x 480 pixels to 1920 x 1200 pixels and greater as time goes on - all depending on what Graphics Adapter card you use.  There is a designed in trade off between the number of colours and screen resolution - and to achieve maximum performance - it is important that you install the correct driver for you graphics adapter. 

Setting Screen resolution and number of colours for Windows 95 & 98 - right click on the desktop background and select Properties to get the Display Properties Window.  Click the settings tab and you will see 

 

Note both Desktop area and Color palette settings - just in case of the unlikely event of other programs being affected. 

If the Color Palette is set to 16 color or 256 color - click on the circled tab and select High Color (16 bit) then click Apply then OK.    You could equally well select True Color (24 bit) - but I consider that there is little to be gained unless you are working on images for reproduction (printing).

If the Color palette is set to High color (16 bit) or True Color (24 bit) - no changes are necessary so just click cancel.