The story about 8 Bit graphic by Mark Ferrari who started working for Lucasfilm Games in 1987 on games like Zak McKracken and the Alien Mindbenders. Graphic back then was between 8 or 16 colous, but his talk is related from 16 color EGA graphic, making more colors with EGA dither and 8 bit 256 color VGA graphic with color cycling.
Check his 8 bit color cycling art work on http://www.effectgames.com/demos/canvascycle/
And what wonders can do dithering in EGA or color cycling watch here