gistfile1.aw

<?php

// This is on the taxonomy archive page, like taxonomy-colors.php

// First get the info about the current term
$term = get_term_by( 'slug', get_query_var( 'colors' ), 'colors' );

// Then see if there's any children of this tax term
$children = get_terms( 'colors', array( 'child_of' => $term->term_id ) );

// If there are children, loop through each and do your own query
if( $children ) {

	foreach( $children as $child ) {
	
		$loop = new WP_Query( array( 'colors' => $child->slug ) );
		...
	}

// If there aren't children, do the standard loop that shows all the posts in the current tax term
} else {

}