The best way overall, as mentioned in comments, is to redraw it at the necessary size.
I've tried many kinds of downscaling but none were of an acceptable quality.
It is genuinely quicker and easier in most cases to just redraw it. Redrawing it with PS can be a bit more difficult than it should be, because arguably, PS was built for much more complex purposes.
That's why I just downloaded a free icon making software. It's extremely simple, and the program is practically built for creating favicons. It took me less than 30 minutes to polish a favicon that I'd already spent hours trying to downsize etc.
The program I use is Icon Craft which you can see below.
Also, I personally drew it at the smallest size,
16px x 16px, and then just duplicated that version for larger dimensions. Which can be done by right clicking on the icon in the menu on the right.
Last but not least, this allows you to create and package multiple favicons in a single