PNG-8 exporting in Photoshop used to produce a smaller file sized image with alpha transparency. With one of the past few Photoshop updates, this option was changed to no longer support alpha transparency, as appearently this was a bug and the files were not saving as intended. However the ability to export a smaller PNG file with semi-transparency is pretty much vital to web design these days, as webpages become more dynamic and responsive, so the change to this function is disruptive to other people's and my own workflow. In my world I don't specifically need an Indexed PNG, just a PNG with a smaller file size and semi-transparency. If I wanted an Index image with no alpha transparency, I would just export a GIF, making the corrected version of the PNG-8 option pretty redundant.
This option is still technically accessable by choosing 'Use Legacy "Export As"' in Preferences > Export, but all legacy options are eventually phased out and I believe this function should be restored as an export option somewhere. Here are my suggestions:
Just readd the old function somewhere in the export screens, exactly as it worked before, but don't label it as being 'PNG-8' or Indexed at all so the name is accurate.
Add the ability for Photoshop to save Indexed PNGs with alpha transparency. This is something the PNG format does support, but Photoshop itself does not, as said in the thread linked above.
The second option is definitely the more complicated one to add, so personally I just want the first option to be available, and not get phased out as a legacy option. I'm sure the second would be useful to some people so it should be considered, but in the mean time I think the old option at least should be changed from being a legacy setting to an additional setting in the current export window.