The Posterize adjustment is designed to simplify an image by combining similarly colored adjacent pixels into an area of the same color.
Select Image -> Adjustment -> Posterize... to display the adjustment parameters.
You can also use a Posterize adjustment layer (Layers -> New -> Adjustment Layer -> Posterize...) which will affect all underlying layers without changing their content.
Parameters:
Levels (2-255). The parameter specifies the number of tonal levels for each channel of the image. The higher the value of the parameter, the more areas differ in color.
Fixed Preview Area check-box. If the check-box is enabled, all changes will be displayed in a small area indicated by the dotted line. If the check-box is disabled, the changes will be applied to the area visible in the Image Window.
Click Default to restore the default values.
Click OK to apply all changes and close the dialog box.
Click Cancel to close the dialog box without applying any changes.