Why do nebulae appear in different colors?

Answer: Energized gases each glow in their own colours, and dust can scatter starlight into blue

Distance stretches the light, so every faraway nebula looks red — Distance mostly makes a nebula fainter, not redder. The light from nebulae in our own galaxy is barely stretched at all; cosmological redshift only becomes noticeable for objects billions of light-years away. The colours we see come from which gases are glowing and which starlight the dust is scattering.

Energized gases each glow in their own colours, and dust can scatter starlight into blue ✓ — Correct! Most of the colour comes from emission: ultraviolet light from nearby stars energizes the gas, and each element then gives back light at its own wavelengths, hydrogen mostly red, oxygen green-blue, sulfur red. Where there is no hot star to excite the gas, dust grains can instead scatter a star's light, and because they scatter blue more strongly, these reflection nebulae look blue, like the haze around the Pleiades. Telescope images often map filters to false colours to separate the elements, and to the eye most nebulae look only faintly grey, because they are too dim for colour vision.

Hot gas glows blue and cool gas glows red, so temperature alone sets the palette — Temperature matters for how a gas behaves, but the colour of a glowing nebula is not a simple hot-blue, cool-red scale. A nebula glows because starlight energizes its gas, and each gas then emits its own fixed wavelengths; two clouds at similar temperatures can look red or green depending on which elements they contain.