The winner of the 6th edition is a game using dark blue/grey and grey, and the 2nd place in the 7th edition is game using 2 (or even 3 it seems, but maybe it is the compression of the images) shades of grey with dithering.
I think the black & white is a suggestion, as it is worded "preferably", meaning you can use any two colours but it is better to use black & white if you don't have any big art ideas, as it will have a better result than a weird pallet. It shouldn't have any impact on the score except if you use 2 colors with a weird contrast being awful for the eye (let's say pure blue and bright yellow for example).
Anything that in on the screen should stick to these 2 colors, meaning that you can't cheat by putting text in the HTML code outside of your game canvas, it will still be considered part of the game.
The pallet switching means that you can switch to any other 2 colours during the gameplay, as long as it is still only 2 colors. It can be useful to convey different moods if your game have multiple levels, as you can use different combinations of 2 colors per level.