Well, games state 16 colours, and if you play for instance Prince of Persia, Xenon 2 or other games supporting vga, these are all in 16 colours.
But I have to admit it's a bit confusing, they're not clear about it (on purpose)
I got some magazines wich state that the Super VGA starts with a palette of 4096 colours (not mentioning the amount of colours displayed), where normal VGA has a palette of 512 colours. SVGA was there already in 1989 or so.
If I know it correctly, Commodore already had the technology to achieve the same gfx back then, but for some reason they did not come up with it.