When observing a sheet covered in yellow and blue dots from a distance, the paper appears green due to the principles of color resolution and the way the human eye perceives color. The phenomenon is influenced by the distribution and sensitivity of rods and cones in the retina, which are responsible for color detection. As the distance increases, the brain blends the colors, leading to the perception of green. Additionally, the discussion touches on the absence of brown in the color spectrum, explaining that brown results from the brain's interpretation of conflicting signals from red and green, creating a unique perception rather than a distinct wavelength.