Each walkable square is 16x16 pixels or 4 tiles.
Each 8x8 tile must correspond to one of 5 palettes you use for your tileset. Each palette has 16 colours.
If you use only 16x16 squares in your tileset object image, you will have space for 256 squares. However, if you properly make use of fegba’s formatting, you can combine and rotate the 8x8 tiles to have up to 1024 squares. (512x512 instead of 256x256.)