This program is part of Netpbm.
pnmquant reads a PNM image as input. It chooses ncolors colors to best represent the image, maps the existing colors to the new ones, and writes a PNM image as output.
All options can be abbreviated to their shortest unique prefix. You may use two hyphens instead of one to designate an option. You may use either white space or equals signs between an option name and its value.
This program is simply a combination of pnmcolormap and pnmremap, where the colors of the input are remapped using a color map which is generated from the colors in that same input. The options have the same meaning as in those programs. See their documentation to understand pnmquant.
It is much faster to call pnmcolormap and pnmremap directly than to run pnmquant. You save the overhead of the Perl interpreter and creating two extra processes. pnmquant is just a convenience.
pnmquant did not exist before Netpbm 9.21 (January 2001). Before that, ppmquant did the same thing, but only on PPM images. ppmquant continues to exist, but is only a front end (for name compatibility) to pnmquant.