How can I improve my Bitmap's quality?

Well, this is not just my theoretical assumption. I'm talking exactly about the Edge devices - that works at least for 1030 and 1040 models and pictures with red background and white foreground.

I understand that it works, but does it really look better with a non-transparent red background than with a transparent background? In my experience there's no difference. The reason I do tend to use transparent background, because for the 1 color icons I can use the same source file (I mostly use svg, but sometimes png) for white and black background datafields.

Of course it looks better than with transparent. If not, I'd not comment in this topic

And of course this approach is applicable only if the device background color is static or has a limited number of options.

When I look at Simon‘s original image (on page 1 of this thread): you can see some antialiasing/smoothing the image by using some grey pixels.

When looking at the rendered picture: there are only black pixels. Antialiasing is missing.
The reason for it can be (imho) that he gives the color using palette 000000 black. All light grey pixels turn to transparent (or white?). Therefore the picture becomes ugly (the same with his heart icon).

Just to test this theory, he should omit the palette statement and see what it looks like.

that's why I always use images that only use a sub-set of the device's palette.

Edge 840 device has 16 bits color depth (more than 16,000 colors).
So, the device‘s palette is not the problem.
What happens if only one palette (black) is set in drawings XML is, that all „nearby to black“ colors turn to black, whereas all „fare away to black“ (like light grey pixels) are eliminated. If you set more palette colors in the XML (or no palette at all), you can avoid this problem. But since Simon uses only black or white palette to define day or night mode color, the antialiasing effect is removed.

That's an assumption. I asked for the relevant file parts to be included (maybe it was in another thread) so we can see and not guess. But it looks that more people are willing to help than it is important for the developer with the problem to be helped...

Yes, I know you asked if it is a secret to see the XML 

But I remember: in one of the first threads regarding drawing the heart, it was mentioned to draw the picture in one color only and use palette black/white to give it day or night color.

That's another reason why we shouldn't mix threads and why we shouldn't open multiple threads about the same thing :) 

Hi mcinner1 you're right but I am not so skilled and I have no idea of how to draw those system default icons via dc :-(