I think it needs some work to make it "learnable". It wasn't obvious to me whether the colours on the side were the final palette, or the "trash can".
It might be nice to have a way to see multiple colours together in a "demo". At the moment you just see one colour as the background.
Lastly I'm not sure that dragging to the side is very intuitive as a way of removing the colour. It mixes two things up - moving the colour to adjust the palette, and getting rid of it. Maybe the user could double-click instead.
All that said, I thought this was great and really fun and intuitive.