What makes an LED such a good colored light source ?

If you want a colored light, LEDs can’t be beat for efficiency. The process that gives off the light makes light of a certain wavelength, which is a function of the junction material. The efficiency of that process is much higher than with incandescent lamps—15% for LEDs compared with 5% for incandescent. Then when you filter an incandescent light down to a single color, you give up as much as 90% in the process. So when you need a colored light, such as a traffic signal, or an exit sign, LEDs have a significant advantage.

Conversely, LEDs aren’t yet as efficient at making white light. LEDs commonly make white light by the process of exciting a phosphor, which gives off other wavelengths of light, giving a combined effect of a white light. The conversion of the phosphor isn’t perfect, so some efficiency is lost.