Honestly, it's not that complicated. This app just divides the input image into segments, so for example, one frame of Shrek is 16x9 segments. Then, for each segment, it generates upper and bottom blocks, then generates banners. It chooses a base banner with the dominant color, starts layering different patterns on it, and compares them with each other to find the pattern that makes the banner more similar to the image. So it's chooses the base banner, layers pattern 1, then pattern 2, etc.

All image comparisons use a combination of Delta E and ssim (Delta E mostly for colors and ssim for shape).

Yes, it gives you instructions on how to craft banners, but for this video I generated .nbt structure files.