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In Photoshop you can add Dither to Gradients. I understand what dither is but when I apply dither to my gradient I can see no difference. What exactly does dither do?

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Dithering is practically imperceptible unless you're working with a gradient on a very small raster image. –  Scott May 4 '12 at 0:24
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Dithering is a technique used in computer graphics to create the illusion of color depth in images with a limited color palette (color quantization). In a dithered image, colors not available in the palette are approximated by a diffusion of colored pixels from within the available palette.

Source: Wikipedia article on Dithering

Without dithering you would often see color banding in gradients and smooth color transitions. Color banding is where you can see the boundaries of color when you really shouldn't. A good example image is here. The image in the top right corner is heavily banded, just below it's been improved with dithering.

If you draw a very light gray -> white gradient in Photoshop with and without Dithering, you will likely see the difference. You may need to zoom in. But anyway, with the millions of colors we have on our displays these days, the difference Dithering makes is often imperceptible.

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I hope this answers your question. You did say you understood what dither is, so sorry if any of this is redundant! –  hamstu May 3 '12 at 22:50
    
Thanks for the information and it is okay if it is a bit redundant, others will see this and may not know. –  Lynda May 3 '12 at 23:18
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The "Noise" parameter you see in, e.g., glow and shadow effect dialogs is closely related, and has the same purpose. Dither and noise don't eliminate quantization artifacts; they just make them not noticeable. –  Alan Gilbertson May 4 '12 at 6:09
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It's also worth noting that banding may be an issue in print even if a particualr gradient looks smooth on screen. –  e100 May 4 '12 at 16:09
    
More specifically, dithering is usually for PRINTED gradients. The improvements are much more noticeable on press. –  DA01 May 4 '12 at 18:07
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