This button opens a new window with the color selection tool.

Anchor dialog/window

To select a color, press the 'Select' button and then move your mouse around the color display.  When your mouse is over the color you like, click the mouse, and the color will get selected.  You may also enter the hex color value (in the format '#ffffff') into the field next to the select button.  If you enter a color value by hand, the a preview of the current color value will display.  Click Apply to use the color, or Cancel to exit the dialog without selecting a color.