Short answer: choose the resolution, optionally keep colour, and download. This is the tool for a 12 MB phone scan of a document; it is the wrong tool for a 200 KB text PDF, which will get bigger.
Why greyscale shrinks a scan
A colour scan stores three channels per pixel; a greyscale one stores a single luminance value. For a photographed document that is roughly a third of the raw pixel data before JPEG compression, and it removes the colour cast from a phone camera at the same time. The text stays as sharp as the resolution you pick.
What you give up
The output pages are images. Links, form fields and the text layer all disappear with the original content stream, because they were never part of the picture. That is acceptable for an upload portal that only wants a smaller file, and unacceptable for a document that someone will later need to search or fill in.