The Highlight action highlights the selected text with a customizable color. This action accepts any of the 80 colors on the Google Docs color palette.
In order to find the name of a color, simply open the highlight menu and hover over it. Type this name into the color field exactly to highlight with it. Additionally, hexadecimal (hex) color codes can be entered to highlight in a custom color. The color green, for example, can be used with the hex "#00ff00". The same technique can be used for actions that change the text color. However, text color cannot currently be set using a hex code, but this functionality will be added soon.
This action has a "toggle" checkbox. When this box is checked, it will unhighlight your selection if it is all highlighted in this color.