It's essentially random. Not skill based. Every color you need to win can be found in the top 5 colors in green, gray, brown, pink, and blue. If I did expand on the game I would limit the color options, starting with removing any colors that have unintuitive names! Thank you for playing!
It literally takes the hex value for the chameleon color, subtracts the background color, and if the difference is less than 20% you're hidden enough.
Unfortunately this has weird results sometimes, and even when you clearly see the chameleon he is considered hidden, or when he looks pretty close, he's way off.
If I expand on the game I will definitely rework the color comparison and reduce the number of colors. :) Another thought I had would be to hand pick the colors, so I would use "moss green" to color any moss in the game, for example.