Here it is!
It seems the original versions of the pixycam didn't have the ability to detect anything other than color. Newer versions have the ability to detect and differentiate simple patterns (EG: red square next to blue square) meaning that the software used in the v5 camera will be slightly different; but the basis of computation is the same. Additionally, the first versions of the pixy cam only differentiated between 6 colors: red, green, blue, yellow, cyan, and magenta. Adding specific colors was added later. Now let's get into how the pixycam works. First, the image is split into individual color channels and subtracting the grey-scale of the image. This leaves just the brightest colors of the initial color channel. The image is then run through a filter to remove noise. Next, each pixel in the image (currently a greyscale) is compared to a threshold value; if the pixel is greater, it becomes white, if lower, black. At this point, no more significant image processing occurs, and all the detection has happened for that color channel. Anything that is white is "detected" anything that is black is just the background (hopefully). This process occurs for every color channel, yielding 6 binary black and white images which are the final result. Technical discussion go!