[Robin_Message]

I think the idea is to interpolate the palettes "in-between" a shift of x and a shift of x+1. If you are going at 60 frames a second, but you only shift palettes every 6 frames say, then you see a jerky ever tenth of a second. If instead you shift the palette by 1/6 every frame (so after a shift of 1/6, you are using 5/6 of colour x and 1/6 of colour x+1), you get a much smoother effect. The computation is trivial, since you are only changing the palette, so you have at most 768 bytes to recalculate. You can also change palettes every frame by outputting those 768 bytes (in fact I think you can only output the changes), which is trivial to do fast.