Here's the scientific description...
which I'll decode as we go along.

The silica spheres are considered to have been deposited from a colliodal suspension, due to evaporation and/or filtration and have accumulated in irregular and regular horizontal layers, predominantly in a cubic close-packed structure.
The water that's trapped in the silica ends up in an organized fashion. This is important to remember, so keep it in mind and we'll move on.

Much opal is found in two types -- volcanic opal where it infills vesicles and cracks in intermediate igneous rocks, and the more familiar sedimentary or sandstone opal. Apart from the main Australian fields, almost all opal found is volcanic opal. Volcanic opal generally contains more water than sedimentary opal, and when mined from relatively fresh lava, has a tendency to dry out and crack. With the exception of some rare Mexican fire opal, most volcanic opal crazes, and many of the occurences throughout the world are of little more than mineralogical interest.
Well, it's safe to say this guy's from Australia. There's some really nice opal in Nevada, ya know. Anyway... remember your basic geology? (Core, mantle, crust... that sort of thing.) Volcanic opal, better known as replacement opal, is formed when a silica gel solution ends up in the cracks or gas pockets of big rocks (boulders. Get it?). So the silica solution settles in, with water trapped in it, and opal is formed. Sedimentary opal forms when the silica gel solution settles in a layer or layers, with water trapped in it. Now remember that this happens over a very long period of time, mixed with in heat and pressure (which is something the earth does very well). Well, lets get on with the color thing.

The origin of color in opal has given rise to as many theories as there are stories concerning the stone's history. However, it has now been demonstrated that the regular array of spheres and voids diffracts white light by breaking it into the complete range of spectral color (Darragh et al, 1976). The color observed is primarily dependent on the layer spacing, which is determined by sphere size.
Remember all that water that's trapped in layers? Well, depending on how big the water spheres are, and what's between them, they act as a prism! That's why when you turn an opal, you may see so many different colors.

The color observed also depends on the angle of incidence of light and the position of the observer. This can be readily demonstrated by rotating red-fire opal and noting one particular area of color which changes from red through green to blue as the angle of incidence to the observer is increased. Green opal will show only green to blue colors on rotation as the sphere size controls the highest order color observed. Likewise, blue opal will show only blue-black color on rotation as the sphere size does not produce the higher green or red colors.
So opal with red fire shows more colors than green, which shows more colors than blue. You know, what's really amazing about all this is that it happens naturally, as a result of time and settling. If you'd like to know how all this factors into worth, be sure to read our page on How to Buy Opals.

So allow me to summarize... What is opal? Opal is a non-crystalline substance more like glass than anything else. It has water molecules bound to the silicon dioxide molecules in varying amounts depending on the mine location and depth of extraction. The lower the percentage of water, the more stable the opal. Generally, we will not purchase opal with more than 4-5% water as measured by our test method. (Does your dealer have a test method?) This reduces the cracking or crazing rate to virtually zero. The only exception occurs when the cutter punishes the stone with physical abuse or overheating or any dehydration process (excessive heat, extraction of moisture by mechanical or chemical means). Did you know that there is man made opal? It's made by many manufacturers, and it's created in the laboratory. Detection of man made opal is reasonably simple. And then there's "clown glass," or various attempts at imitation opal. But nothing comes close to Mother Nature's own. If you're interested in learning more about opals, then by all means visit your local library and read up! And you can always email us.