I use 12V RGB Pixels known as "bullet" pixels due to it's shape. Each pixel is an LED light capable of producing the entire rainbow of colors at varying intensities. Pixels uses 3 data channels to control it, one each for Red, Green and Blue. A typical string of 50 Pixels would use 150 channels in your sequencing software.
The kind I use only have 3 wires. (12V power, Data, Ground). The lights come in either 5V or 12V. 5V lights are cheaper, but since less voltage is running through it, the problem of voltage drop occurs more frequently. Voltage drop occurs as power runs through the string of lights, each pixel uses up some of the voltage before passing the left-over power to the next pixel... and by the time you get to the end of a long strand, the brightness and color can be affected due to voltage drop. This is solved by power injecting every 50 pixels or so. 12V pixels also run into voltage drop issues, but not as frequently since more power is running through them. For example, my large snowflake has 216 pixel lights on it and I only needed to power inject at the end of the light strand.
I also use 12V RGB Addressable Flexible Strip Lights inside the arches that use the same "3 wire connection" of 12V, Data, and Ground. These are handy because you can cut them to any length on the 3 copper lines and solder pigtails on the end for easy connections. They just need waterproofing by squeezing hot glue inside the tube and over the solder joints and sealed with some heat-shrink tubing.