The rainbow appears to have seven colors because of the way sunlight interacts with water droplets in the atmosphere. This interaction, called dispersion, causes the sunlight to split into its component colors due to varying wavelengths. The resulting spectrum includes red, orange, yellow, green, blue, indigo, and violet – creating the familiar seven-color sequence in a rainbow. However, the colors are actually a continuous spectrum, and the division into seven distinct hues is a human perception rather than a fundamental limitation of the phenomenon.