Another game with a limited palette (though this time as an intentional choice, not a hardware limitation) is Rogue Sentry. I played it a while back and really enjoyed it. It’s a twin-stick shooter.
Lately I’ve been thinking about the appeal of the simplicity of video game worlds in general, and I guess particularly of the extremely limited ones. They are kind of like the versions of the world that you encounter in dreams, often missing a lot of elements (though this is not always obvious because your consciousness is similarly limited) but stripped-down and focused in a way that makes it appealing to spend time there.