The format of the TV signal is NTSC, known jokingly as Never Twice the Same Color.
This is because the hue and brightness signals (it's actually HSV going to the TV not RGB) going through that RCA cable are close in frequency and carried on the same pins, so they interfere with each other heavily. In fact old Apple // systems actually rely on this interference to produce colors by outputing a 280x192 black & white signal causing predictable interference patterns. That's right, 280x192 is too high resolution to do on a TV set without getting color bleeding from interference.
The way they produce readable text on TV broadcasts (even though its much bigger than you'd normally use on the computer) is that the images are heavily anti-aliased to reduce this interference before broadcast. (the interference mainly only occurs on edges between highly contrasting colors, i.e. black text on white if you don't give it a grey edge).
Some color combos work better through this than others. Blue & white is a much better combination than black & white for it.
Also, since the scan lines run horizontally, the color bleeding, etc. only happens in the horizontal direction. You can use the full 480 vertical resolution, but a lower horizontal resolution will work better on TV (unless you anti-alias to make up for it).