Looked it up - it means to colour as in colouring books, etc. (how I think it was meant for this lesson) but could also be used as 'to dye'.
Yes, lliw is the noun colour and lliwio is a verb-noun to colour derived from it.
It told me I had a typo with colouring and I should have spelt it American-fashion "coloring".
Unfortunately, I just got the same typo information, so it doesn't seem to be fixed, sorry.