A long time ago I made an example of posterization in an astronomical image, but due to my busyness I was unable to share it with you sooner. This example image was done with an OSC CCD camera (but it’s really not related to just and only OSC CCD, it’s related to any image no matter what equipment you have used to acquire that image). It’s related to post processing and a possible mistake that a newbie (was me a year ago in this regard) can easily make. Following image examples and corresponding histogram levels show the problem so that everyone can see it.
Notice the color of the stars. In a posterized image it is barely visible (white stars). Additionally a posterized image shows huge amount of color noise. It all depends on how you stretch (when doing linear stretch be aware of the range (min and max ADU values) of your data!) and how you convert from IEEE float FITs into 32bit (or later 16bit) TIFF format. By a wrong convert you can loose lot of the dynamic range. Good tool is using a hyperbolic function for the channel stretch that can be found in FITS Liberator for instance.
What did I do wrong that time? I was using a really great registering software program (that has only one downside, it always outputs integer FITs) while my workflow was like: register all Red channels, register all Green channels, etc. then combine/stack (results in IEEE float FITs), then again register these master color channels together. But the registering program was only able to produce FITs files in integer format. So when I first registered, everything was fine, integer format FITs as input were outputted as integer format FITs. But by stacking into a master frame I have converted them into IEEE float FITs. Then I put them back to the registering software that posterized the images by outputting into integer FITs again Lesson learned by my mistake. Now I register all color frames on a reference image altogether so as I do not have to do it again in a later phase.
Therefore be aware of how you stretch and convert from master stacked image! Do not loose the dynamics by cutting dark or bright (or both) parts when stretching. Posterized images simply do not look good.
OK that was a use-case from real World example (and experience), but what says the theory? Check the Internet, e.g. http://en.wikipedia.org/wiki/Posterization.