Photoshop Tutorials - Posterize
Posterize command lets you transform the image reducing the amount of levels, reducing their amount to several local colors. This principle is widely used in graphics, for example, in creating the posters. That is why the command is named so.
In regular poster, there are two or three colors, while the range of the Posterize command can be set from 2 to 255 levels in the Levels field of the Posterize window.