The colour refers to how much colour is actually visible in the diamond.
Diamond colour grades start at D and continue through the alphabet. Truly colourless stones, graded D, are extremely rare and very valuable. The closer a diamond is to being colourless, the rarer and more valuable it is.
A ‘D’ colour diamond, the highest available, will be graded as colourless. As you go down the scale, the intensity of a yellow tint in the diamond will increase to the naked eye. For example, a T colour diamond would be graded as light yellow. This will be obvious from the naked eye.
D: Absolutely colorless. Extremely rare diamonds.
E-F: Colorless. Traces of colour can only usually be detected by a trained gemologist. Rare diamonds.
G-H: Near-colorless. Yellow colour is difficult to detect except in side-by-side comparisons with other diamonds.
I-J: Near-colorless. Slight yellow hue may be detectable.
M-Z Noticeable color.