The key point some people are missing here is that removing noise from a video before compression makes it more compressible. So if you compare a video compressed without denoising/degrading at bitrate X to a video that was filtered and then compressed at bitrate X with "fake noise" added later, then the latter will have edges and details that the former doesn't.
The principle of post-processing videos to add noise or sharpening is something that desktop media players have supported for years, some are even reasonably good at it.
Exactly. Everyone is going on about grain quality but are in fact comparing wheat and spelt (if I may).
What matters to Netflix is the bandwith/quality ratio, that’s it. Removing noise before and adding it in software at playback time will produces a significantly better result, at similar bit rate. Because compressing noise produces horrible results.
The principle of post-processing videos to add noise or sharpening is something that desktop media players have supported for years, some are even reasonably good at it.