It is using adaptive threshold and dilates the sign-flipped error. Error is - I_cur when it is above T; otherwise, error is 255-I_cur. It did not use the CAH order and without ETF promotion.
(1) It shows white when I_cur is above T and the rest shows as (255-I, 255-I,0).
(2) It shows black when I is below T and the rest shows as (255-I, 255-I,0).
It is not using CAH order and the error is still using the older CAH values. The thing changed here is the weights. It is good for structure. Still I did not get the large black areas.
If without error diffusion, it is a thresholding method. The new modification is very close to this quality, but clustering pixels better. It means the error diffusion works but it is not the major factor to the structure quality now.