I can’t see how this is possible. You’re losing so much information.

It's because they're natively trained with 1 bit, so it's not losing anything. Now, the question might be how they manage to get decent predictive performance with such little precision. That I don't know.

I always remind myself and everyone else that human DNA is "only" 1.6 GB of data, and yet it encodes all of the complex systems of the human body including the brain, and can replicate itself. Our intuitive feel of how much stuff can be packed into how many bits are probably way off from the true limits of physics.