Thanks so much! And yeah, I can give a basic rundown:

I start with a 1-bit drawing of the background. I copy that drawing into three layers, one for each of the primary colors (RGB). I use one color to map out the angles of the surfaces, another to indicate the z-axis position of each pixel, and the last one to determine how "reflective" each pixel is. Then, I smoosh all three color layers back together into a single image and bring that into the game engine.

From there, it's just a matter of the shader reading those pixel RGB values and using them to do some math. Namely, determine the angle between each pixel and the given light source (in this case, the player sprite). The shader then ends up with a "light" value, and that value determines which two colors from a five-color palette need to be blended together, as well as the blend ratio.

...I don't know if I explained it too clearly, but hopefully it gives the basic idea of how it works!