I saw this movie in July or August 1986. It wasn't a commercial movie - I didn't see it in a normal movie theatre.
The story takes place somewhere there are 3 nations, each on its own cloud. The yellow nation, where the story's hero is from is modern and everything is yellow. There are overtones of a police state here. The hero is some kind of tinkerer/inventor and creates a large hoop that enables him to fly. (Picture Vitruvian Man where the circle is a yellow hoop, except he's wearing a yellow jumpsuit.)
The hero flies to the red nation, which is more overtly militaristic. Here the hero encounters a young woman dressed entirely in red. Guards (in red) chase him off, but she gives him a red rose. She is taken to her father, who seems to be the generalissimo in charge. The architecture of the red nation is brutalist; large blank slabs. I remember large square plinths, but I may be conflating memories of Golgorath.
Meanwhile, people have been watching our hero fly through a telescope in the blue nation. The blue nation is very Louis XIV, aristocrats and courtiers with lots of blue lace.
The hero returns to the yellow nation where he is immediately arrested and dragged before the ruler (queen?). He presents her with the rose and she glares at it until someone douses it with yellow paint, at which point she picks it up and smiles. Nastily.
The hero is put to work building more flying hoops. Some time later, troops of yellow painters (yellow coveralls, yellow power-rollers, yellow backpacks full of paint...) are sent flying to the red nation. At the same time a huge (blue) hot-air balloon takes flight from the blue nation, and they converge on the red nation.
The yellow and blue contingents start painting the red nation, which fights back with a huge machine that I recall looking like a gigantic (red) fireplug. Of course blue paint meets red paint, red paint meets yellow paint, yellow paint meets blue paint, and everyone marvels at the new colours.
I seem to remember a title like "Color Wars" but that's not helping me find it.