Setting MainPaletteItemsSource to collection of > 20 Colors creates additional borders between the PaletteViewItems.
The Workaround is to set MainPaletteOrientation = Horizontal and MainPaletteColumnsCount = 10.

The XAML team has recently reviewed this issue and will not be addressing it as at this time the team is focusing on the bugs impacting the highest number of developers. If you have encountered this issue and it is blocking for your work please contact us through the support ticketing system with details on your setup and a reference to this item.