I took a closer look at the colorful band of embroidery. I expected some sort of cross stitch, but a closer look revealed something more interesting.
Unfortunately my close up picture is blurry, but what's going on here is that the blocks of color are actually little rectangular bits of applique, presumably made from different bits of colored leather.
The dark marks are the stitches holding the applique down. I'd never seen this type of embellishment before and was very impressed with the craftsmanship.