That's as true lossy as JPEG, which first "blindly" applies quantization in pre-processing step before doing RLE and Huffman compression. From the example you

That's as true lossy as JPEG, which first "blindly" applies quantization in pre-processing step before doing RLE and Huffman compression. From the example you can see it's not a simple blur, it's side-effect of lossy application of PNG filter.