Stranded color knitting is not the only method of knitting with more than one color. Another method is intarsia knitting which is shown in the lovely sock pattern below from Borealis Sweaterscapes . (Slip stitch knitting is an additional method to accomplish color knitting patterns.) Both stranded color knitting and intarsia use color charts and have many ends in to work in after you're done knitting. Most knitters who enjoy knitting with multiple colors will eventually find themselves with a pattern that requires at least some intarsia and it is often up to the knitter to decide which technique to use for various charts.
In stranded color knitting you carry all the colors you're using along the entire row; in intarsia you do not. In stranded color knitting you end
up with a thicker fabric because of the stranding and floats on the inside of the work; with intarsia you only have a single layer of knitted fabric.
In intarsia you twist the yarns around each other every time you get to a color change (called interlocking); this is not done in stranded color knitting. Most stranded color knitting is done in the round; intarsia is most frequently knit flat. In intarsia you'll see bobbins, yarn butterflies, or long strands of yarn hanging from the back of the work; in stranded knitting there is usually just several skeins of yarn attached to the back of the work.
Intarsia is also called picture knitting . If a color chart requires really long floats or 12 colors per row, you'll want to choose intarsia. If you want to knit a large initial on a sweater for instance, you'd use intarsia. If you want to knit authentic argyle socks or knit most of Kaffe Fassett's beautiful designs, you'd use intarsia. Duplicate stitch is also often combined with intarsia for more intricate patterns.
The best way to tell if something is knit using the intarsia color knitting method is to look at the back of the work. The first photo shows the back of stranded color knitting with the ends woven in using reverse duplicate stitch; the second photo shows the back of an argyle sock with the ends woven in using a diagonal split stitch method specific to intarsia knitting.
There is definitely an art to get good tension in intarsia knitting - it isn't as simple as just interlocking yarns every time you get to a color change so to learn more here are some links to excellent intarsia information.
Borealis Sweaterscapes has an info page HERE and a free pillow pattern to get you started HERE. Check out some of their gorgeous intarsia sweater and sock patterns.
Vicki Meldrum is an expert intarsia knitter and has some info HERE.
Lucy Neatby has some intarsia tips HERE.
If you'd like to learn even more, this small self-published booklet is the bible of intarsia knitting. Intarsia: A Workshop for Hand and Machine Knitting by Sherry and Keely Stuever. It is inexpensive and last time I looked Elann sold it. It is full of color photos and diagrams of all sorts of intarsia techniques.