Which modes need it
A cable has a fixed data rate and a video mode has a bill. DSC steps in when the bill is bigger than the cable. DisplayPort 1.4 carries 25.92 Gbps of data and HDMI 2.1 carries 42.6 Gbps. Here's what some popular modes ask for, uncompressed and with DSC:
- 1440p at 240 Hz, 8-bit: 24.6 Gbps, or 8.2 Gbps with DSC
- 4K at 120 Hz, 10-bit: 32.3 Gbps, or 8.6 Gbps with DSC
- 4K at 240 Hz, 10-bit: 68.6 Gbps, or 18.3 Gbps with DSC
- 8K at 60 Hz, 10-bit: 62.1 Gbps, or 16.5 Gbps with DSC
The 1440p mode fits DisplayPort 1.4 on its own. The 4K 240 Hz mode doesn't, and it only works there because of DSC. A DisplayPort 2.1 link at UHBR20 carries 77.37 Gbps and takes the same mode raw.
Where 3:1 comes from
DSC doesn't use one fixed ratio. It aims for a number of bits per pixel instead, and the typical target on VESA's website is 8. A pixel with 8 bits per color is 24 bits, and 24 squeezed into 8 is 3:1. A 10-bit pixel is 30 bits, and 30 squeezed into 8 is 3.75:1. So the "about 3:1" in the card is the 8-bit color case, and deeper color works out to a higher ratio.
The Display Bandwidth Calculator uses the 8 bits per pixel target. For 4K at 240 Hz and 10-bit color that turns 68.6 Gbps into 18.3 Gbps, a ratio of 3.75.
Visually lossless is a test result
DSC isn't mathematically lossless. It meets the visually lossless test in the ISO/IEC 29170 standard, where viewers try to tell the compressed image from the original and can't do it reliably. In most test images DSC passes, though some viewers did spot compression in certain images. Treat the claim as "hard to see" rather than "identical".
DSC is a low latency design, and both ends of the link have to support it: the graphics card compresses and the monitor decompresses. DisplayPort 1.4 includes DSC, and HDMI 2.1 supports it too.
What to trade if you skip it
If a link or a device doesn't support DSC, something else gives. You can lower the refresh rate, drop to 8-bit color, or use chroma subsampling. Halving the color data takes 4K at 144 Hz and 10-bit from 39.2 Gbps to 19.6 Gbps. That fits DisplayPort 1.4 without DSC, at the price of softer colored edges and text.