>It fell out of favor because OG Xbox was bad at it

It fell out of favor because hardware no longer needed to use palettes as they had enough memory to store the actual color.

It fell out of favour when the move to 16-bit systems meant no more hardware sprites.

I assume you mean the move to 16 bit color framebuffers, not systems with 16 bit CPUs? That was about the point where palettes and sprite and tile based 2D acceleration stopped being relevant.

The SNES and Genesis definitely had hardware sprites. The PS1 and PS2 worked with palettized textures 99% of the time and had hardware quads. The N64 could do palettized textures and quads. The same for the OG Xbox, but it was a big speed hit vs DXTC. With the Xbox360 and PS3 you could implement palettized textures as a shader. But, only the most special cases bothered.

It fell out of favor when we could just store 1000x more sprites. It was memory, not instruction-set. Tinting then happened as a pre-build step until finally shaders replaced the practice entirely.

Instead of “fell out of favor” I shoulda said “artists stopped being informed of its existence and occasionally invented poor approximations to it from first principles”. Such as tinting sprites to approximate palette swaps of the retro style they are referencing.

You can do so much more than tint with palettes. The animations in the link I posted each a composed of a single 8-bit image and a function to rotate specific sections of the palette.

I’m intimately familiar with palette animations. You’re right though, it’s a technique that was lost due to hardware no longer limiting the artists. I still find it to be far superior to sprite tile replacement animations.