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I think early on the M stripes were kind of an homage to the brand from racing fans. I'd reckon today very few if any of the folks who deploy these colors know what they mean or even watch any motorsport.
but for the record...
The BLUE represents the city of Bavaria by using the Bavarian blue found on its flag.
The RED represents Texaco's red found in its logo. BMW partnered with the Texaco oil company during the early racing days.
The PURPLE color represents the merging of the two companies as partners in motorsport. Overlapping the blue over the red results in the color purple. This is a simple and elegant way to represent the partnership of two brands by.
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