There's a great article on AVWatch, a Japanese site (click for Google machine translation) which explains how Sony used their Super Bit Mapping process (as seen in their BDP-S5000ES high end BD player) to avoid unsightly color banding on EVANGELION: YOU ARE NOT ALONE.

Typical 10-bit to 8-bit conversion with rough steps visible

Sony's process adds noise to great effect. Images from AV Watch.
Because animated content like this is digitally produced from start to finish now, there is no chance of the picture becoming noisy or grainy. This means that there is no noise or grain present in the master to act as a dither, and rough color banding transitions suddenly become apparent. Sony's process carefully injects noise into the image to hide said banding.
An interview with Mr. Yokota Kazuki, who works at Sony's PCL authoring/encoding facility, explains the BD creation process. Because the studio master tapes (almost always HDCAM SR in the case of BD) used as masters are already 10-bit, rough color banding can be expected during the encode to BD-friendly 8-bit AVC. (The iteration of H.264 Advanced Video Coding used in BD only allows for 8-bit, as do the other two codecs supported by the format).
That's all good if the source is 10-bit (most are), but what if the material arrives in 8-bit? Mr Kazuki explains that an 8-bit master can also benefit and be "de-banded" using Super Bit Mapping.
The article also has some great comparison images - no idea if they've been exaggerated for effect, but you get the idea.
Of course, such processes do not seem to be unique to Sony. Microsoft have developed a similar process as part of a utility called "xScaler" which pre-dithers 10-bit video to allow it to degrade gracefully to 8-bit. In fact, you may already have watched the results - it was used on the BD release of "Ratatouille".
Noise really is a wonderful thing. Sony and Microsoft have created more advanced processes, but I also routinely use noise generation when working with low-detail sources to increase the perceived detail and "fill in" areas corrupted by compression.

I'm pretty sure they added Super Bit Mapping to the Playstation 3 during one of the firmware upgrades late last year.
I wonder if that means animation titles actually potentially play better in the Playstation than other films and i wonder if thats the reason i saqw no banding in the underwater scenes in Superman Returns yet everyone at AVS was telling me there is banding in those scenes or does it just work with animation ?
I wonder if Happy Feet which is said to contain banding would look better now.
I don't think it's in the PS3; I did tests with it against the S5000ES earlier this year and could see the differences - and I don't think that my firmware was out of date.
In animation like this, the banding will be pretty blatant, but in live action I'd guess it'll depend very much on your setup. What display are you using, and is it calibrated, etc?
They added a feature called bit mapping a while back but perhaps that is related to the audio side of things. I probably am confusing that with Super Bit Mapping.
Using a Panasonic AE3000 and i calibrated it using AVIA although thats not ideal.
Still waiting for a decent priced perfect HD calibration disc to hit the market. They have one on AVS forums advertised but it looks to be missing a few features.
Yeah, it doesn't have any such feature for video. This is one of the few times where high end BD players actually have a real performance advantage.
Is there any particular reason for 10-bit mapping not being supported in the Blu-ray spec? I'm no doubt missing something, but if that were the case, would that not avoid any need for conversion, and eliminate the banding problem altogether?