I have ZWO CCD ASI533MC Pro. In INDI, it has 4 capture formats available: Raw 8-bit, Raw 16-bit, RGB 24, and Luma.

For almost a year, I was capturing using Raw 16-bit, and it produced a 16-bit single channel (not RGB image), but somehow, when I process using WBPP in PixInsight I get the final image as RGB and it is a very beautiful one. Although I was very satisfied with the results, capturing grayscale single-channel 16-bit to produce RGB was bothering me, so last night I tried to capture everything in RGB 24-bit format. The file is bigger (understandable), but the image has less quality even when shown in KStars viewer. I have attached sample images

My questions are:
1. Can someone explain how KSTARS views grayscale 16-bit as a color image?
2. What is the best practice format to follow with MC Pro cameras?

Thank you in advance...