Visible error from aggressive bit reduction — posterization, color banding, blocky gradients. Occurs when color resolution drops below perceptual threshold.
You're implementing a color grade that transitions a sky from a soft blue at the top to a lighter blue at the bottom—and suddenly, instead of a smooth gradient, you see sharp bands on the monitor. That's a quantization artifact. It occurs when the available bit depth isn't sufficient to represent the transitions between color values smoothly. The rendering engine jumps from one defined color value to the next instead of creating fine gradations. This problem is acute with 8-bit material; it quickly arises with log curves during color correction due to aggressive grading moves.
In everyday viewing, this manifests as banding—especially in sky scenes, water reflections, or flat backgrounds. The posterization looks artificial and destroys naturalness. In a VFX context, this is exacerbated when you combine keying with weak alphas or work in 8-bit pipelines: color edges become jagged, and gradient mattes show steps instead of smoothness. This becomes particularly disruptive flickering over time with rotoscope mattes and luma keying.
The countermeasures are pragmatic: work with 16-bit or 32-bit floating-point where possible—in Nuke, After Effects, or DaVinci Resolve's color workflow. Use dither or subtle noise to mask the quantization steps; the human eye accepts fine noise more readily than sharp posterization lines. For gradients in compositing: apply a slight blur or use expressions that increase the bit depth. For the final export—if 8-bit is unavoidable—enable dither in the encoder (DNxHD, ProRes, H.264 all support this).
Preventative measures: retain log data longer, perform color grading in 32-bit, and only convert to delivery bit depth at the very end. For green/blue screen shoots with weak alpha: work in DPX 10-bit instead of 8-bit TGA. Most modern cameras deliver 10-bit or more anyway—don't waste that by converting to 8-bit too early. Do a quick preview in 8-bit to check how your final output looks; if you see banding, it's time to smooth your color curves or apply dither.