Color blocking is the technique by which you take a pattern and add seams so that you can make a solid colored part 2 different colors or more.
If you've ever sewn a quilt, you've done this before. Take a square, split it into four squares, add seam allowance and sew those squares together to make the big square, but with 4 pieces. Super easy, but, like most things, only after you know how to do it!
Doing it with clothes is just as easy, only you don't start off with squares. Here's a quick guide I drew up:
...Yep, that's it. Cut up, add seam allowance. Precision is key, but if you're used to sewing doll clothes, you're already better at precise sewing than most people!
And of course you can add more than 2 colors, but the more seams you add, the more bulk you add so you have to be careful not to do too much color blocking on small dolls. A stripe of contrast will usually work, while making a miniature version of Joseph's Amazing Technicolor Dreamcoat, not so much!
The bigger the doll, the more seams and thus the more color blocking you can do without risking making the clothes too thick and stiff.