Use case or problem
8-bit images or pixel art appear blurry when inserted into an Obsidian note. This is most noticeable when the image is at its original size and not upscaled. (I can’t show an example image here, because uploading a pixel art image to a forum post also makes it blurry, it seems 
)
Proposed solution
To be honest, I don’t completely understand how this works technically, but this past Help thread brings up a solution:
toggle Nearest Neighbor/Point image filtering
Being able to enable sharp pixel interpolation is useful for digital artists working with pixel art, textures pulled directly from retro games, or for precise color/value sampling from pixels.
Current workaround (optional)
The blurriness is less visible the larger the image is upscaled, basically the bigger each “pixel” is. If pixel images look blurry in Obsidian, you can upscale these in another program, then decrease the height/width back to the intended size in the Obsidian embed, which results in a sharper-looking image.