The problem is that in terms of file sizes, a "quite lossy" dithered PNG file is still likely to be larger than a "low loss" AVIF. AVIF can look fine in full c

The problem is that in terms of file sizes, a "quite lossy" dithered PNG file is still likely to be larger than a "low loss" AVIF. AVIF can look fine in full color at 0.5 bits per pixel. That's equivalent of a black and white dithered bitmap with 2:1 compression ratio. Low-color dithering can be a nice artistic filter, but it's not useful in image compression in general.