This occurs on all places - applying a colormap picture that is below 512x512 causes horrific compression.
In the video, when I delete SurfaceAppereance, it shows how TextureID looks like when it is applied on the mesh.
This issue is pretty problematic when you want to have lower res transparent textures by using AlphaMask transparency.
Hello, thanks for the report. At the moment, we have different dimension requirements in order to support various systems. For now, it’s best to stay within power-of-two, especially when re-using textures for different instances, in this particular case you should be good using 256x256.
Thank you again for the report, this issue has been noted.