Spot color is both a method of printing, and a method of specifying a color.
In spot color printing, each color is printed with its own ink. A contrasting method is process color printing where colors are created by combining 4 inks (cyan, magenta, yellow and black). Spot color is used when a color is difficult to create by combining CMYK inks (e.g. a fluorescent color).
Spot color is useful when there are up to three colors. After that it becomes too expensive.
