The Colossus was useless at decrypting Enigma traffic: that was handled by the electronic bombes.
Colossus was constructed to break Lorenz/Tunny traffic: a much more advanced system designed for encrypting teleprinter five-bit Baudot-code teleprinter transmissions. Dilettantes will harp on Tunny’s greater number of rotors, but it was a far more radical departure than might at first appear. As many subsequent stream-ciphers, Tunny XORed cleartext to a cryptostream. Amongst other things, that meant that there was no restriction against a character in the ciphertext being the same as the corresponding character in the cleartext, a flaw which allowed skilled cryptographers to infer what might, conceivably, be contained within a given stretch of text.
Two sets of ‘wheels’ were summed independently to a five-bit cleartext word. One set was advanced on every word and one advanced only if another wheel’s value was !FALSE (this wheel itself advanced on every word). This meant, amongst other things, that sometimes part of the keystream did not increment, and this in turn had a discernible effect upon the statistical distribution of the difference between successive ciphertext words.
Reconstructing the keystream from these distributions is how Tunny was broken, and that is the task that Colossus was designed to automate. (Mumbling about Colossus’ Turing-Completeness is fundamentally ill-posed, as no machine has the infinite memory capacity envisioned by Turing. I will however emphasise that Colossus lacked a stored program facility, a concept that was only developed much later.)