Avatar hitboxes can be enabled via the Developer menu (
CTRL-Alt-Q) → Render Metadata → Avatar Hitboxes.
An avatar hitbox represents the approximate physics shape of the avatar. Some people doing combat activities in SL use hitboxes for aiming.
Avatars' hitbox colors are based on their dot colors on your minimap. These colors can be customized by using Contact Sets and setting custom colors for sets. In the global settings for Contact Sets, tick “Color minimap icon based on their contact set.”