The Posterize tool is designed to intelligently weigh the pixel colors of the selected area or active layer and reduce the number of colors while maintaining a semblance of the original image characteristics.
Posterize Tool Settings
The number of levels used here represents the number of colors that the tools will use to describe the active layer or selection. This number does not include black and white.
The Preview toggle allows the dynamic updating of the active layer or selection when changes are made to the Posterize Levels.