Keyboard Maestro can display a number of Palettes (or Toolbars).

There are three types of palettes:

1. Global Macro Palette
2. Macro Group palettes
3. Conflict Palette.
4. Applications Palette

Any macro with the Global Macro Palette trigger will be displayed in the Global Floating Palette. This palette appears whenever there is one or more active macros with this trigger, so it may appear and disappear depending on which macros are active (remember that Macro Groups control when a macro is active).

Any Macro Group can be configured to display as a palette. Since Macro Groups can be active in specific applications, this can be used for application-specific palettes.

When you use the same trigger (such as a hot key, device key, or typed string trigger) that is assigned to more than one macro, and all of these macros are active, then Keyboard Maestro will display the Conflict Palette listing the triggered macros and let you select the desired macro, either by clicking on it or by typing a letter that narrows that palette down until only one macro remains at which point that macro is triggered.
You can use the Conflict Palette to limit the number of hot keys you need to remember by give a bunch of similar or related macros the same hot key and then selecting the desired macro with a further keystroke based on the now visible palette.

The Applications Palette shows the currently running foreground applications.

You can show/hide the Applications Palette in the General preference pane, or by choosing the Status Menu ➤ Show Applications Palette menu.

You can drag files on to the palette icons, and you can control click on them to perform various actions like hiding or revealing in the Finder. You can also hold various modifier keys down while clicking to perform the actions.

Applications can be excluded from the palette by selecting Exclude from Applications Palette in the contextual menu, or by adjusting the excluded applications in the Exclude preference pane.

You can order the applications alphabetically or by launch date by selecting Sort by Launch Date in the contextual menu.

By using the Show Macro Group or Show Macro Group for One Action actions, you can display a macro group as a palette. This allows you to build nested palettes. For example, a palette could contain a number of macros that simply show different macro groups.

By using the Mark or Unmark Macro action, you can have macros shown in macro palettes appear ticked to indicate some state (for example an application dock that marks or unmarks the macro as the application launches or quits). Alternatively, you can enable and disable macros to have them appear or disappear from a macro palette. Either of these techniques will allow some level of dynamic behaviour of palettes.

You can control the appearance of the palettes in the Palettes preference pane or in the macro group configuration. You can choose the style, the opacity of the palette, the size of the entries, the number of columns, whether the entries include the icon, the text and/or the trigger, the title bar (v8.2.1+), and whether the palette shrinks when the mouse is not over it. You can use the styling to build palettes that just display their icon for example, and combined with custom icons for your macros this can create a nice looking icon palette.