It usually does, but the article talks about manually drawing out a grayscale image by following luminance numbers. That’s generally not considered “indexed color” unless you’re using a mapping of pixel values to grayscale values (indexing) to reduce the number of valid pixel values for compression purposes.

To me it means I as a bad artist am just filling in colors likely with really bad color mixes on an image. It has a connotation of really low end art.

I mean, I would associate the term pretty strongly with indexed color with irregular regions, not with square pixels.