Coloration and figural properties of neon color spreading and the watercolor illusion are studied using phenomenal and psychophysical observations. Coloration properties of both effects can be reduced to a common limiting condition, a nearby color transition called the two-dot limiting case, which clarifies their perceptual similarities and dissimilarities. The results are explained by the FACADE neural model of biological vision. The model proposes how local properties of color transitions activate spatial competition among nearby perceptual boundaries, with boundaries of lower-contrast edges weakened by competition more than boundaries of higher-contrast edges. This asymmetry induces spreading of more color across these boundaries than conversely. The model also predicts how depth and figure-ground effects are generated in these illusions.