Often the color is chosen to highlight certain features. Because the image may not reflect the real colors of the Earth a human eye would see, it is called a false color image. The utility of satellite imagery is in how scientists choose to process an image. Scientists can distinguish certain features from others based on their spectral characteristics or how strongly a feature shows up in one wavelength of light compared to another. For instance, vegetation reflects strongly in the infrared wavelengths.
Healthy vegetation reflects differently than unhealthy vegetation.
Sensors that can record radiation in the infrared wavelengths obtain data that can be used to distinguish between healthy and unhealthy vegetation. This is only one example, but the applications are endless. Environmental monitoring, ecological research, and urban planning are just a few broad disciplines that utilize satellite imagery.