I changed a color on my baby festive vulnyx and now I'm getting a message saying that his colors can be updated to a new color variation. What exactly does this mean and what will be changed?

It would change it back to the color it was before you dyed it.

Does that happen if you dye any themed pets, or just certain ones?

Any themmed, pure breed included, however for the pets that were dyed / breed out of coloration before this option was added you will nead to triger the reset by using another dye on them (i highly suggest using only lesser dye to reset pets since coloration pre-reset dosn't matter) ^-^

Thank you, I never knew that, I thought the pets I saw that on had had their colors updated for the official theme.

I have often thought about dying a couple of themes, because the pet might have a trait(s) and most colors I love, but one or two that I don't like. It is nice to know that I can then 'revert' the pet if I decide I like the original colors, or if someone else wants the theme but still wants original colors on it.