I presume you mean something like the scheme on this Albatross DV?
As far as the fuselage colours are concerned, it is difficult to believe that this kind of thing was anything other than a morale-boosting exercise which happened to aid recognition. Out of all nations, British aviators seemed to have been allowed less scope than other countries.
But the lozenge scheme on the wings of this aircraft, which was very common in the latter half of the war, may look gaudy close up but was a very effective camouflage scheme from any distance, especially from above. It worked on the zebra principle of breaking up the outline of the aircraft. The fabric was printed like this in the factory before being cut to fit the aircraft, so was not a question of being painstakingly applied in the field. From above, this aircraft's gaudy fuselage would hardly be noticeable.
Apparently, red dye was the most difficult to obtain, and so was reserved for the aces - though I feel vulnerable to being shot down on this one by those who may tell me this is a myth. If true, it may be why the greatest ace of them all had an all-red aeroplane.
The yellowish colour of many early war aircraft was the colour of the unpainted linen fabric