What happened to my photo? (background is pixelated?)

This is nothing new. When digital video came into the professional video arena the amount of bits available was only 8 bits per sample. Those doing post production soon realized that only 8 bits caused areas of the scene with slight change in amplitude would show the digital quantization. Some post production engineers introduced noise dithering of the least significant bits to minimize the visible effect of inadequate sampling resolution.  It was soon demanded that equipment suppliers and standards makers change and adapt to 10 bits per sample. Once this was accomplished it helped greatly. Some of the higher end post houses developed means to have greater than 10 bits per sample when they had control of the creation process.