After Effects and Media Encoder Bit Rate Issue with H.264/MP4

H.264 MPEG compresses color in blocks of 4 pixels, at best predicts 2 out of 3 frames, and is only 8-Bit. You will always get banding with subtle color changes with very little noise or grain. The way to hide the banding is to add noise or grain. Cranking up the data rate will reduce a little of the compression artifacts. Higher Bit Rates will never give you more colors. 

You should NEVER render h.264 MPEG files to use as production footage that will be edited and rendered again. Drop an H.264 file in Premiere Pro, do nothing to the shot but render it, and there will always be a measurable quality loss because MPEG is a lossy format.

If you are rendering shots that need to be edited (that's more than 98% of my work), you should always choose a lossless format. The Render Queue's Output Module/High Quality preset is where you should start, and you'll have even better luck if you set the comp to 16Bit color and the color to Trillions of colors. I always go to the Edit/Templates/Output Module menu and edit the presets to run at Trillions of colors or more if the Codec supports it. Unless specifically requested by a client, I never render a DI (Digital Intermediate) or Production Master as an 8Bit file. Even in 1994, when I first started working with After Effects and storage costs were between $500 and $1000 / GB, I never rendered a DI with a lossy format. We were stuck with 8 Bit color, but we rendered lossless for everything but motion tests we had to send to a client. 

Nothing wrong from the looks of it. A large uniform area like this will always show banding with MPEG compression and you cannot enforce anything in terms of using a larger data rate. This is a classic case of the algorithm at work. It will simply use that largest available block size with barely any sub-blocks. Hence the low file size. Different image content would of course change that.

Mylenium 

Without any actual screenshots of the renders and exact specs of the files we can't really tell you much. That said, just cranking up the data rate doesn't realyl resolve the issue and it would be logical, that the encoder would not continuously max it out even if bandwidth is available and depending on thge actual dimensions, of course it won't do that, anyway. What would you do with 135 MB/s on a HD project when even a 4k project wouldn't necessarily max it out?  Similarly, the MPEG levels influence how blocks are created and distributed within the frame. There's more to it than just overcranking the data rates.

Mylenium