Step 2Index colors
The first way is to change the image mode to "Indexed Color" and limit the number of colors. Play with the number of colors and the dither settings to see what results you get with the different values. The key is to get the highest quality possible with the lowest number of colors.
Update: When you are satisfied with the result, you'll have to change back to RGB color mode to be able to do the last steps. The colors have already been discarded so now you can work in RGB mode.
The other way is to use the Posterize filter. Same here, try different numbers and see what you get.
You could also start by making a custom palette with the yarn colors you have availiable and choose that palette in the "Indexed Color" dialog... Maybe more applicable if you are using beads
(The mario image already had the perfect number of colors so no need to change anything there)
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