No, it does not *automatically* print all spectrum of colors. If you want photo-quality, you will need to do a four-color printing process. Programs like Photoshop and Gimp will separate the colors and you would create a screen for each of the basic printing colors (Cyan, Magenta, Yellow, and Black). You would use each screen to print the next color. After all four colors are printed, you will have a photo-quality screen print.
It prints in whatever color ink you use, one color at a time. You only need one Yudu machine. You could buy one screen (and emulsion sheet) for each color layer you want to add, or, if you're feeling very patient, you could burn the image for one color, go through the entire printing process, clean the screen, apply new emulsion, etc... basically do one color layer at a time until you have as many as you want.