Step 1: The bands are coloured according to the eye's colour perception in the respective spectral range, see the spectral response curves of the eye. Step 2: The band images are combined into a RGB image.
Step 1 is done automatically when using image processing software and is shown here for an easy understanding only.
RGB stands for red, green and blue. The RGB colour code produces colour images from three single images, denoted as R, G and B channels, in an additive way.