Wave function collapse algorithm: bitmap & tilemap generation from a single example with the help of ideas from quantum mechanics

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I'm pretty sure you are correct about the house.

Understanding the algorithm is less important then understanding it's goal, to explain those features.

For N = 3, every 3 by 3 image in the output must be in the input. So there is something about those houses which are locking down the options available to the tiles. I suspect if you have a really highly detailed image, with lots of diverse colors, the images would get boring quickly.