By default, you can only add palettes to a scene's palette list. With the Advanced Palette Lists preference enabled, you can choose to store add palettes to the palette list of individual elements if you choose. Here is an explanation of the two different levels of palette lists:
Scene palette list: This palette list and its palettes are available for and can be used in all of the scene's elements. Hence, it is the most simple and least restrictive approach, and is the type of palette used by Harmony when Advanced Palette Lists mode is disabled. It is most recommended to add your palettes to your scene's palette list if you are doing digital animation, where character models can be made of many different elements that must use the same palette.
Element palette list: A palette list associated with a single element in your scene. An element is the container for the drawings used by a drawing layer. Hence, when an element has a palette list with its own palettes, only the drawings in that element can use the colours in these palettes, and the palettes in this element's palette list will only be shown in the Colour view when a drawing from this element is selected.
Using element palette lists as certain advantages, depending on your type of production:
In paperless and traditional animation projects, characters are usually drawn on single elements. Hence, you can use this to associate characters in a scene to their colour palette.
If a scene requires a lot of palettes, linking those palettes only to elements that need them rather than to the whole scene can help declutter your palette list.
When a palette and its clone are in the scene's palette list, Harmony will only use whichever palette is highest in the list. If you want one element to use the original palette and another element to use the cloned palette, you can do so by adding the right palette to each element's palette list.