Tried various settings and the banding is still there. Its most obvious while character is moving, and becomes almost non visible while stationary.
Any other fog areas like desert act2 or other dont produce such strong banding as act1 areas. I guess its the monitor and no way to walk around this issue.
ULMB mode produces no banding probably due to different monitor mechanics.
Other games never produce banding except for 1 space game in certain situations.