Hi!
Like water drops in falling rain, the CD separates white light into all the colors that make it up. The colors you see from a CD are interference colors, like the shifting colors you see on a soap bubble or an oil slick.
You can think of light as as being made up of waves - like the waves in the ocean. When light waves reflect off the ridges on your CD, they overlap and interfere with each other. Sometimes the waves add together, making certain colors brighter, and sometimes they cancel each other, taking certain colors away.