How is the fauux.neocities.org dithering compression effect made?

I'm trying to find out how the dithering compression effect of this site fauux.neocities.org was made (click on "Go visible" inside the site to see what I'm talking about).

The creator posted some info abt the site and the creative process on Reddit.

He said that "From the first day the style was basically set. I liked the idea of the 10MB limitation, so I kept going to see how much I could make with it. [...] It grew natural, there were no grand plan so to say. I just really fell in love with the dithering compression as it fit right into the Lain universe." ...

... so I guess it should have something to do with compressing images on PS to reduce the image size and getting that dithering effect (the creator said somewhere else that he used PS to make it).

I also found this post, with diferent suggestions on how to make a really similar effect.

What do yall think?

Thanks!