Well, in a 16x16 block you only have 16x16=256 pixels, so the blocks themselves are basically "true color". Stack blocks and you'll have lossless true color. Of

Well, in a 16x16 block you only have 16x16=256 pixels, so the blocks themselves are basically "true color". Stack blocks and you'll have lossless true color. Of course, this was more interesting before .png support became widespread in browsers. (Also, I believe you're not restricted to 16x16/256col blocks. If you can fit a pattern of 255 distinct colors + transparency over a larger image, you could stack several frames to create the same effect, without having to drop down to 16x16 local blocks)