Lumetri color causes pixelation

That is a lot of tonality (brightness) change to an area of low initial contrast. Meaning that there would not have been a lot of individual pixel data kept in the initial recording. That's how that form of compression works.

Say you've got a block of pixels that are 120/106/38 - 122/107/40 - 121/108/40 - 119/105/37. Gee, that's all pretty close to 120/107/39, right? So all it records are a block of four pixels at 120/107/39.  Less data to record to the card in-camera. It gets a smaller file written faster.

And because that area is a wall or sky or some other large surface, with pretty close color/brightness, it writes a WHOLE bunch of these blocks that are all a bit different, but close enough you don't see them if nothing changes. But within each block, the pixels are identical.

But now, raise the contrast or saturation ... doing something quite notable with at least the brightness or color ... and the image shows as irregular blocks of color/tone. Because each block moves together, but all a bit differently than the next one. And as each block is slightly different, those differences are made massively visible.

Depending on the image, you can get either macro-blocking like this, or banding.

Sometimes adding "dithering" ... "grain" or noise, to the image, small bits of dots like unto film grain ... then doing color changes, can get the image through with far less notable blocking or banding. And the problem wasn't created by say Lumetri, it was already there, just so slight you couldn't see it. Ah, the joys of "visually lossless" data.

To do what fix you can, besides adding dithering/grain, using small amounts of several different tools to make the same final, overall change can help. And do better visuallly than all the change with one tool.

So maybe start with a small change of the Lumetri Curves control for hue to hue, and a small amount of hue brightness curve change. Then do a very small amount of change with the HSL tab of Lumetri, selecting the area, checking with the mask option, then applying some denoise and softening, before slightly changing the color and lifting brightness.

Neil

That looks like macro blocking, so I'm curious what the original color was? Any tonal changes to brightness or contrast applied?

A lot of long-GOP media  ... H.264/5 ... is very prone to macro blocking on color work.

I've had to help a number of people rescue what they could from drone shoots, phone cameras, or just 8 bit DSLR video recorded in H.264. Sometimes it's not too hard, sometimes  ... ah well.