Banding is a specific visual defect: smooth gradients in the picture appear as stair-stepped "bands" of slightly different colour instead of a continuous transition. The classic places to spot it are big areas of single colour — a sunset sky, a wall lit by one lamp, a misty fog, the back of a dark cinematic scene. Once you see banding, you can't un-see it; it's the visual marker of "this video doesn't have enough data to describe what I'm looking at smoothly".
Two things cause banding. The first is bit depth that's too low: 8-bit has only 256 brightness levels per channel, and the eye can resolve smaller steps than that on smooth gradients. The fix is to use 10-bit (or higher) encoding, which gives 1024 levels and pushes banding below the threshold of human perception in almost all cases.
The second cause is bitrate that's too low: even with 10-bit, an over-compressed video has to round many neighbouring pixels to the same value, recreating the same stair-step pattern. The fix there is more bandwidth, smarter rate control (per-title encoding), and an encoding feature called dithering that adds a tiny amount of noise to dissolve the bands. In practice, modern streaming services combine 10-bit encoding with dithering precisely to suppress banding on the kinds of content where it's most visible — animation, dark thrillers, anime.
