I think the suggestion is that the client could just stop downloading at a set threshold, maybe taking current bandwidth, cost, etc. into consideration.
Judging from the video, something like that could work very well (and much better than with progressive jpegs).
It's an interesting concept. But I'm not sure how it could work. Resizing introduces artifacts so best quality is always going to be achieved by reencoding for different resolutions. Also, how would the client know when to stop downloading?
The client would download the first 1KB for an icon, 4K for a thumbnail and the whole image for the full size. The best part is that all of those are actually the same file, not separate embedded thumbnails inside the file.
The client could decide BY ITSELF to download only 2K for a thumbnail because it's currently on 3g.
Maybe a future version of the format would specify useful cut-off points for browsers to make the decision inside the header. Then the browser can decide to download 4K version on wifi and 1K version on 3g.
This will have to be automated or it's going to be really annoying for development. To eliminate that, maybe the file format could incorporate some internal tags for good size thresholds, or even just a handful of coefficients at the beginning for a simple curve approximating the byte-to-resolution mapping.
Judging from the video, something like that could work very well (and much better than with progressive jpegs).