Dithering is the approximation of a color by the visual mixing of adjacent pixels of a similar color used in producing acceptable images based on a limited color range. Pixels are automatically arranged in such a way as to fool the human eye. Without dithering techniques many bitmap images would look harsh with jagged edges when the available color palette is restricted to 256 colors or less.
 

	No dithering is used.
	Useful when you want to improve the look of the image, but still achieve good compression ratio. After light dithering the picture can be compressed almost the same as without dithering.
	Floyd/Steinberg - This dithering process greatly improves the quality of the video but it can introduce unwanted artifacts in low-resolution images, slow down processing up to 50% and significantly decrease the compression ratio. However, it's irreplaceable if you want to produce high quality 8-bit video output.