As a staining agent, iodine interacts with specific cellular components to produce a color change that enhances the visibility of structures under a microscope. In the Gram stain procedure, iodine binds with crystal violet dye to form a larger complex that is retained by the thick peptidoglycan layer of Gram-positive bacteria. This interaction results in the purple coloration of Gram-positive cells, while Gram-negative cells appear pink after counterstaining with safranin.