ppmdist isn't all that different from ppmtopgm in that it converts from color to greyscale, except that if you have a color image having (just for example) three colors - the background, and some foreground stuff in a red and a green in an unfortunate brightness ratio, then with ppmtopgm it'll be hard to tell apart the red from the green in the resulting image. With ppmdist, the (grayscale) contrast between the red and green is maximized, making it much easier to tell them apart.

ppmdist works best with low-color computer-generated images.

• If you use it on something with a lot of colors, it's pretty hard to tell any difference from ppmtopgm. That means that today's antialiased text output doesn't benefit that much from ppmdist, because antialiasing uses lots of colors to simulate higher resolution.
• However, sometimes you can get a good result by piping your high-color image through something like "ppmquant 6" first.

Here are 3 example images to show what ppmdist does. Granted, I've carefully picked the red and green intensities:

1. This is a color image:
   
2. This is that same image, converted with ppmtopgm:
   
3. This is that same color image again, converted with ppmdist. Note that the shades of gray are distinguishable from each other:
   

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