How can a minor stimulus, resulting in an "all or nothing" chain of action potentials be converted into something as specific as the vision of color?
Visual phototransduction is the one of answers to your question.
It is a process by which light is converted into electrical signals in the rod cells, cone cellsand photosensitive ganglion cells of the retinaof the eye. This cycle was elucidated by George Wald (1906-1997) for which he received the Nobel Prize in 1967. It is so called "Wald's Visual Cycle" after him.
The visual cycle is the biological conversion of a photon into an electrical signal in the retina. This process occurs via G-protein coupled receptors called opsins which contain the chromophore 11-cis retinal. 11-cis retinal is covalently linked to the opsin. When struck by a photon, 11-cis retinal undergoes photoisomerization to all-trans retinal which changes the conformation of the opsin leading to signal transduction cascades which causes closure of cyclic GMP-gated cation channel, and hyperpolarization of the photoreceptor cell.
glutamate is continually being secreted at synapse between photoreceptors and bipolar cells.
1)A light photon interacts with the retinal in a photoreceptor cell.
The retinal undergoes isomerisation, changing from the 11-cis to all-trans configuration.
2) Retinal no longer fits into the opsin binding site.
3)Opsin therefore undergoes a conformational change to metarhodopsin II.Metarhodopsin II is unstable and splits, yielding opsin and all-trans retinal.
4)The opsin activates the regulatory protein transducin.
5) This causes transducin to dissociate from its bound GDP, and bind GTP, then the alpha subunit of transducin dissociates from the beta and gamma subunits, with the GTP still bound to the alpha subunit.
6) The alpha subunit-GTP complex activates phosphodiesterase or PDE.PDE breaks down cGMP to 5'-GMP.
7)This lowers the concentration of cGMP and therefore the sodium channels close.
8) Closure of the sodium channels causes hyperpolarization of the cell due to the ongoing efflux of potassium ions.
9)Hyperpolarization of the cell causes voltage-gated calcium channels to close.As the calcium level in the photoreceptor cell drops, the amount of the neurotransmitter glutamate that is released by the cell also drops.
10)A decrease in the amount of glutamate released by the photoreceptors causes depolarization of On center bipolar cells (rod and cone On bipolar cells) and hyperpolarization of cone off-center bipolar cells.
As is explained by AliceD above via CN 2 using labelled line principle.