The ATtiny85 only has 2 PWM pins, so obviously you can't make all 3 colors of the RGB LED fade in and out smoothly, right? Wrong.
The way I got around this was by using software PWM. This means that I can fade in and out of all 3 colors using any of the pins on the ATtiny.
How software PWM works is by setting the pin HIGH and then LOW at different rates so that the LED looks like it's dimming. This is called Persistence of Vision or POV (for more on POV, see my instructable here
). The LED blinks so rapidly that the human eye can't detect that it is flashing at all, and it sees instead that the LED appears to be dimming.