A painted card has a yellow, purple, blue, or grey color splash on the card back. See below for color splashes.
Yellow=Legendary; Epic=Purple; Rare=Blue; Grey=Common. Basic cards do not get a color splash.
Master Michelo is designed to reward both knowledge of an opponent's deck and smart deckbuilding by your opponent. You can use Michelo to help predict what your opponent has drawn and will draw, especially if their deck only has 1 or 2 cards of a single rarity. Likewise, the opponent can bluff having a certain card in hand of the same rarity as another key card.
EDIT: Picture formatting and concept.
EDIT 2: Credits to Fortify for this great example picture:
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