True! You’re less likely to be surprised by banding on a display, because you can see it before it’s a problem, and it’s less likely to cost money, but for sure the need for dithering is still there, especially for displays that can do more than 8 bits per channel or can do high dynamic range.

> Consider that a grayscale gradient can only have 256 distinct levels.

This is true, but also keep in mind that for print and low dynamic range displays we humans only need approximately 256 levels, as long as the levels are perceptually spaced out evenly. 8 gamma corrected bits per channel actually made sense for a long time, for both print and for TVs & monitors, until HDR displays came along, relatively recently. Needing dithering for 8 bit images displayed on a 10 bit display is perhaps less surprising than needing dithering even when your display and your printer are both only 8 bits, right?