ryans In theory an external display should always be presented as 8-bits to the GPU and drivers and the display would do any needed dithering on it's own, but sadly that isn't the case and many GPU's and GPU driver do dithering even when presented with a 8-bit color depth from the displays EDID.
Your using 8-bit, you'd have to enable 10-bit manually, and many applications don't support it.