The idea that dogs only see the world in black, white and shades of gray is a common misconception. What’s true, though, is that like most mammals, dogs only have two types of color receptors (commonly called “cones”) in their eyes, unlike humans, who have three.
Each of these cones is sensitive to a different wavelength (i.e. color) of light. By detecting different quantities of each wavelength and combining them, our three cones can transmit various signals for all the hues of the color wheel, the same way the three primary colors can be mixed in different amounts to do the same.
But because they only have two cones, dogs’ ability to see color is indeed quite limited compared to ours (a rough comparison would be the vision of humans with red-green colorblindness, since they, too, only have two cones). Whereas a human with full color vision sees red, orange, yellow, green, blue and violet along the spectrum of visible light, a dog sees grayish brown, dark yellow, light yellow, grayish yellow, light blue and dark blue, respectively—essentially, different combinations of the same two colors, yellow and blue:For the rest of the story: http://blogs.smithsonianmag.com/science/2013/07/new-study-shows-that-dogs-use-color-vision-after-all/