I can't explain it, but it's like uncanny valley pixel art. Like the artist hasn't done the final polish pass maybe?

Maybe it's the inconsistent lights/shadows?

Maybe a pixel artist has the proper words to explain the issues

Not pixel artist, but game dev working with pixel art:

1 - AI just try to compress too many details into so few pixels.

When artists create pixel art they usually add details along the way and only important ones because otherwise it will look like rubbish on some screens.

Also it's easier to e.g add different hats or heads or weapons on the same body. AI generated ones is always too unique.

2 - AI try to mimic realistic poses that look like art supposed to be animated in 3D.

For a real game if you make lets say isometric tactical game you'll never make tiles larger than 64x64 because of how much labour they will take to animate. Each animation at 8fps take hours of work.

So pixel art is usually either high-fidelity and static or low-fi and animated in very basic ways.

The skeleton has issues, floor tiles are very inconsistent for example. I haven't looked more carefully. We probably notice something wrong subconsciously but it takes time to point those out.

Generated pixel art for now is 80-90% done state. To use them in prod, issues should be fixed which seems to be the palette and some semantic issues. If you only generate small parts of the big picture with AI, it will be perfectly usable.