There's a common misconception out there that dogs are color-blind. They aren't, per se, though their range of colors is much more limited than that of humans. A TED video by Barnard psychology professor Alexandra Horowitz explains that our canine companions experience the world largely through their noses -- and in some incredible ways.
For example, dogs have stereo smelling, which means each nostril smells independently so pooches get a sense both of what a particular smell is and where it's coming from. Dogs breathe in one hole in the nose and and out of another, so they're always bringing in olfactory information that gets sorted by hundreds of millions of olfactory sensors. Those sensors send tons of information to the olfactory bulb, which, relatively, is much larger in the dog's brain than in a human's.
Even crazier is how dogs can smell things that can't be seen. Canine noses detect the vast array of hormones humans and other animals give off, and can use that information to determine things like whether a potential mate is nearby, when human friend is pregnant or sick and whether a particular creature is friendly or hostile. Oh, and they can smell in time, meaning they know which dogs have previously visited a particular tree or fire hydrant as well as what those dogs have been eating and even how they're feeling.
It's all pretty incredible, and you can learn even more about your canine's olfactory system in the video at the top of this post. I, for one, am going to trust my dog's nose more often, and maybe even let him stop at the nearby fire hydrant to "check his email." Or, pee-mail, as I like to call it.