For a monochrome on/off sign (all diodes off or lit with uniform intensity), I step the intensities in 0.01% steps to make sure that the individual steps are not visible during pitch-black night when the display may step down to maybe 0.01 of max intensity. So next higher intensity level will be 0.0101.
I do not totally understand what you mean, but if your PWM is running at 120Hz or faster, no 'modulation' is visible. I can not imagine .01% of max even being visible, let alone the most 'pleasant' intensity.
If what you mean is that the viewer should not see the intensity change from step 1 to step 2 then your intensity correction will be too slow. I tried "invisible" intensity regulation and, with minuscule, inidividually undetectable steps, a change from dark to light (e.g. the bus driving into the brightly lit depot) looked virtually the same with 256 steps as with 16 when the reaction was rapid enough or was waaaaaaaaaaay too slow.

The number of steps mainly is an issue for the thinnest slice of your color modulation, for monochrome, it should be a piece of cake.

Erik