On the Good E-Reader Blog, Michael Kozlowski explains the upgrade and what it may mean for users of the technology:
...smaller brands such as Onyx Boox, Meebook, iReader and Hanvon have managed to increase the grayscale with dithering enhancements on a software level from 16 levels to 256 levels.
There is no magical e-paper technology that has a higher level of grayscale. They use simulation to do it via dithering algorithms on a pure software level. This is how they can bypass the 16 levels of grayscale and instead use 256 levels. Instead of having 256 levels of grayscale on specific applications, such as the PDF rendering engine or the ebook reading app, all these companies managed to make it system-wide. Every navigation entry, text, or image will look sharper without fuzziness or antialiasing issues. On a basic level 256, it smooths over any pixelated sections caused by gradient scaling.