Basically, a lookup table (
http://en.wikipedia.org/wiki/Lookup_table) allows for a simple "translation" of one value to another. Say you have a grayscale image of, for the sake of argument, a map of a hilly landscape. Light gray = higher, dark gray = lower. Grayscale in this instance can be defined as 255 shades of gray, 0 darkest, 255 lightest. We now want a color image that shows tops of hills in red, valleys in blue. So the lookup table features, for example, grayscale value less than 50 = shades of blue, grayscale values over 200 = shades of red.