Annatto is a fruit whose seeds are commonly used as a spice or food coloring. It can provide a nutty, peppery flavor, and generally gives food a yellow or orange coloring. It is commonly used in conventional butter to make that whitish stuff look more like real butter.
Plants Are Paleo
Because it comes from a plant, annatto is one of those rare food additives that is actually Paleo-friendly. Although some people have trouble digesting the seeds, it has not caused enough issues to be considered a major food allergen, probably because no one is eating the seeds by themselves. They are consumed largely as a food additive.
Safe v. Unsafe Food Additives
For more information on which food additives to avoid and which to allow, check out this post.