Comment by lifthrasiir

tl;dr:

  00xxxxxx          - copy (x+1)-th last EXPLICITLY ENCODED pixel (i.e. ignoring repeats)
  010xxxxx          - repeat the last pixel x+1 times
  011xxxxx xxxxxxxx - repeat the last pixel x+33 times
  10rrggbb          - copy the last pixel and adjust RGB by (r-1, g-1, b-1)
  110rrrrr ggggbbbb - copy the last pixel and adjust RGB by (r-15, g-7, b-7)
  1110rrrr rgggggbb bbbaaaaa
                    - copy the last pixel and adjust RGBA by (r-15, g-15, b-15, a-15)
  1111RGBA [rrrrrrrr] [gggggggg] [bbbbbbbb] [aaaaaaaa]
                    - copy the last pixel and replace RGBA if each bit flag is set

So it is essentially the PNG filter limited by Sub, but offers better delta coding and a larger history window. My guess is that it might not work well if the image has a strong vertical gradient (which would need the vertical context), but nevertheless it's pretty impressive that this simple coding is not as inefficient at all.