..sometimes it refers to the color, which is sometimes used to indicate purity, but ive found more often that not, as some other older ppl w tell ya, that alot of that is just marketing and the theory doesnt hold water. for example, some of the best* L ive ever had had a slight amber tint to it. and yes, LSD is LSD and even though bright white fluffy crystal is ideal, many times color is not a reliable or consistant way to judge purity, as the most minute of impurities such as less than a few percent, can drasticallly chanfe the color of the crystal. in the end something of 60% purity laid at 100ug a dose is really only 60ug a dose; thats the only real significant diff in my opinion...
and if youre dealing w raw crystal, you can tell how pure it is by what you use to dissolve it in, and how easy it dissolves. if its fluffy white and it dissovles easily in sterile water(not tap,ever,of course!) then you know youve got the bees knees

even if it dissolves w.o much work in ethanol you can asssume its pretty pure. now if youve got za bunch of gunk settling or seperating, then you may have a problem :/ again this is all IME..
but these days you really never know. since so many ppl follow that code; for example, someone telling you they have lavender, in most cases certainly never saw the actual crystal, could be their way of telling you- hey its active and legit.. but its not the purest ive ever had. so i guess in some aspect their little scale can help you to guage the strength of what they are giving you.
and tht doesnt just go for LSD; ive seen this fact to lie true w other chems such as DOC, the 4-subs, DPT, DMT, etc.
the best way to tell purity is to taste the shit! and do so w an open mind; dont let the color or :brand name" fool you into thinking its gonna be a "dirtier" or "different kind of trip" such a big part of it is mental and affected by your subjective presumptions- try not to let that get in the way!
it is true that sometimes there are i guess what would be byproducts that were left behind that may have some pschoactive properties on their own. but a lot of that lies within the mind. placebo is a mofo, mang. trust your judgement, not some bs that has no significant relevance except for the stigma that it carries.