[racket] why do I get undefined , when using internal definition?

Following code returns #<undefined> :

(define (make-color color)
 (define color color)
 color)

(make-color 'red)  ;; => #<undefined>

>From the guide , I get that internal definition of color is not initialized
therefore the result is #<undefined> . What does not initialized means
in this context.

My assumption was that internal color will be bound to the value of
argument.

When was #<undefined> introduced (or it was always there).
I "think" I have used this type of code before , and it worked fine then.

Thanks