I built a mood light using an Arduino Nano and an RGB LED, diffused through a ping pong ball. The mood light is controlled using a push button and two potentiometers. The mood light has two modes: one in which you can set the color of the light, and another in which the RGB LED will automatically cycle through the hues of the HSV color spectrum. The push button changes between modes, and the potentiometer on the left changes the brightness of the light in both modes. In the "Set Color" mode, the potentiometer on the right changes the hue of the light, and in the "Cycle" mode, the potentiometer on the right changes the rate at which the colors cycle.
Click "Read More" below for details about my build process.