This appears to be a game (in development) for a handheld device I hadn't heard of. There are a few other posts about it on his blog.

I didn't see any code, but it sounds like the post was detailing how he marks (manually) which section of his models will have a dither pattern -- basically just masking.

There are a a bunch of posts about it if you go to his blog index, there are only 7 pages so it's easy enough to flip through them, they're all labeled with the DailyDriver name. There might be something in there about the render process.