A hard cutoff, applied to each colour channel separately. Anything above threshold in a channel goes to full, anything below goes to nothing.
Because the three channels are decided independently, a colour photograph collapses to the eight corners of the colour cube: black, white, and the six fully saturated primaries and secondaries. It is a blunter, more graphic result than threshold, which reduces everything to grey first.
antialias is worth turning on. Without it the cut is exactly one pixel wide and diagonal edges come out as visible stairs. With it, the effect asks how quickly the picture is changing at each point and softens the cut by exactly that much, so a shallow gradient gets a wide soft transition while an already-sharp edge stays sharp. You get smooth boundaries without blurring anything that was crisp to begin with.