photon78s Thanks! That is interesting. What model display is this? What I see is that even the 8-bit level breaks down without Apple dithering. That surprises me if this is truly an 8-bit native panel.
And I think we can see from the no Apple dithering photograph that the banding does still have blending between divisions at the 8+ bit levels. This makes sense since the FRC of the LG display is likely taking over the dithering. To do this, it needs 9-bit or greater input signal. With an older/slower 8-bit cable, the banding should be sharp edged above 8-bits, and roughly match the 8-bit level in band count.
What you are seeing here is what I would expect on a built in display of a MacBook if the TCON was taking over dithering. But @DannyD2 shows the MacBook Air M2 15" does not show any evidence of the TCON dithering taking over for Apple dithering.
Another interesting note about your photos is how much higher quality the Apple dithering is than the LG TCON dithering, in terms of color. The edges are sharper above the native panel depth. So it makes good sense why Apple wants to pass their proprietary dithering to a display. And once they do, a dithering algorithm down the chain cannot touch Apple's signal. A dithered signal should simply pass through any further attempt at dithering down the chain, unchanged.
But I am still curious why your LG display sees improvement with dithering at the 8-bit level. This really indicates that the panel is only 6-bit. I'm not sure if 7-bit native panels exist, but that would fit what we are seeing more accurately.
