The colours are the result of diffraction by small cloud droplets.

The droplets scatter light waves mainly from their surface.�Each surface point is a source of outgoing spherical waves.�The waves interact with each other and in directions where wave crests coincide there is bright light.�  Where the crests cancel there is darkness.�The result in the sky from millions of same sized droplets is a circular diffraction or interference pattern � a corona.

Things change when the cloud droplets have different sizes in different parts of the cloud. Diffraction still occurs but we see a many coloured jumble rather than well ordered coronal rings.

When the droplets in one area have a wide range of sizes or the cloud is thick enough for multiple scattering to occur then we no longer see any corona or iridescence.