The colour green is Yellow Guy's favorite color, but also a colour disliked by the Notebook, being criticized by it as "not a creative color". It seems to be intentionally removed from common conventions involving background objects or obscured from scenes throughout the series, presumably in reference to the very first episode.
Don't Hug Me I'm Scared
The colour green was first disliked by the Notebook and in the least subtle way. She asks the main puppets to collect leaves and sticks and arrange them in to their favorite colour. The Yellow Guy arranges them as green. The notepad directly states, "Green is not a creative colour".
Don't Hug Me I'm Scared 2
The colour green is hated in a more subtle way. Tony says to the puppet that it is "Time to have a bath". The Bird Guy protests and says "What do you mean, we're already clean?". Tony then baths the puppets and says "Scrub, scrub, scrub til the water's brown." Following the rhyming pattern the words clean and brown should rhyme together but they don't, the only colour that rhymes with clean is "green" so Tony is purposely ignoring green, though it may be because it doesn't make sense for the water to turn green, and that dirt is brown.
Don't Hug Me I'm Scared 3
Shrignold and the rest of the love cult do not seem to dislike the colour green, although rainbows in the flying sequence lack green stripes.
Don't Hug Me I'm Scared 4
The Computer asks the puppets what their favorite colour is. The picture on the computer screen only shows the colours blue, yellow and red, although most electronic systems use an RGB (red, green, blue) colour model.
Don't Hug Me I'm Scared 6
During the dream sequence, a portrait of Duck Guy is obscured by camera. Also, the green button on that same camera is mostly hidden by the next one along.
In the ending, all the puppets are now their favorite colors. This also means that Yellow Guy is now green.
The word green is partially cut off by the Traffic Light during its short appearance.