my $array_reference = \@array;
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That assigns a reference to @array to $array_reference where the reference is created by putting the backslash in front of @array.

print "COLOR: $$array_reference[3]\n";
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Dereference $array_reference (done by adding the second $ sigil) and access the 4th element.

foreach (@$reference) { print "IN THE SUB: $_\n"; }
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Loop over the list created by the dereferenced array referenced by $reference and print out each element.

For a good start on references and dereferencing see. tye's References quick reference and perlreftut.
HTH

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broquaint