This circuit gives a changing-color LED display, where a LED will emit a dynamic shifting color, from red to green smoothly through yellow. The circuit uses NE556 dual timer, equal to two 555 IC but in only one package. The oscillators is set at different frequencies. The high frequency (upper part) is used to construct a PWM signal, and the lower frequency oscillator is used to control the shifting frequency. What is done by the low frequency oscillator is no more than modulating the duty cycle (active factor) of the PWM.
The PWM signal is generated by comparing a high frequency sawtooth-like signal with a slow varying reference. And two comparator is used to produce two complementary PWM signals. When the first PWM signal has (x) active factor, then the complement would have (1-x) active factor. In reality there is no yellow LED, but when the green and the red has 50% duty cycle then the combination would produce a yellow color. Since the PWM signal changes its ducty cycle slowly from zero to 100%, the impression will look like the LED shifts its color smoothly from red to green back and forth.