Concept #2: Dilution
Cream Dilution
Cream Dilution affects both red and black pigment and is responsible for diluting the pigment to a lighter shade. It is the gene responsible for producing perlinos, buckskins, palominos, etc.
Horses can carry one copy of the gene (called single dilutes) or two copies (called double dilutes).
The cream dilution gene is marked as "Cr" or "n" if not present.
Dun Dilution
Dun Dilution affects both red and black pigment by lightening the body coat. Duns are most noted by the dark stripe down the middle of their back (called the Dorsal Stripe). Other markings may include a darker tail, mane, face, and legs.
The Dun allele is dominant, therefore only requiring one copy of the gene to present the Dun phenotype.
It is represented by the letter "D" or "d"
Quarter Horses, Paints, Appaloosas, Icelandic Horses, Norwegian Fjords, Paso Finos, Peruvian Pasos, and many pony breeds have shown to exhibit the dun dilution gene.
Silver Dilution
Silver Dilution only effects black pigment and is a dominant trait. It behaves opposite of the agouti gene by diluting the areas of black pigment. As such, the effects vary greatly. Black horses typically have a lightened mane/tail and their body may be more of a chocolate color. Bay horses will also have a lightened mane/tail and lightened legs. Chestnut horses, though not physically seen, may be carriers of the silver dilution gene.
Silver Dilution has been seen in Quarter Horses, Rocky Mountain Horses, Icelandic Horses, Morgans, Shetland Ponies, and Miniature horses.
It is represented by the letter "Z" where present and "n" when not present.
Check out what happens when you breed a Bay Dun with a Bay Dun (both EeAaDd)!
I color-coded it to help make it easier to follow.