“Dithering” is the key — except this seems to have been done by hand.

When I was a kid, I owned a monochrome display that could only display at CGA resolutions “640x400” 1-bit (and 320x200). Many games and art and didn’t support that showed up garbled.

Then I got hold of Deluxe Paint that would load pictures in color and dither them with an algo called Floyd Steinberg. And the pictures that I saw on my friends VGA monitors suddenly looked beautiful on my monochrome screen.

See examples https://surma.dev/things/ditherpunk/

Games like Monkey Island were also ditherered for monochrome displays and they looked great.