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It's only for high bitrate matrices, where such fine details would be kept, not for normal compression where it gets eaten for lunch. It makes some noticeable difference at mid-high bitrates but it's not really good until exorborantly high. Or at playback, of course. (At the time I thought it was more of a dither+grain filter, but it's dither-only.) Since I'm not working on that show now, I haven't had the incentive to improve the last step of the filter (which I think is quite suboptimal).
Really, YV16/YV24 is the only way to truly remove visible banding in encodes. (If lavc could decode to YV24 and convert straight to RGB that would be awesome.)
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