You're still thinking about dithering being about colors. It's about finding the best member of set B to stand in for a member of set A when |A|>|B|.

In color dithering A is the set of colors in the original image and B is a smaller set of colors. Often just pure black and pure white, but that doesn't have to be the case.

In Bresenham A is the relative x,y coordinates of the ideal next pixel in the line if the pixels were infinitely small (thus |A| = infinity), while B contains the relative x,y coordinates of the 3 pixels that are actually available: +1,0; 0,+1; and +1,+1 (with appropriate rotation for the other 3 quadrants).

An important feature of Bresenham's is that the error inherent in this assignment is carried forth into the decision made for the next pixel, such that the total error is diffused along the line and its average value stays close to zero. Such error diffusion is also a feature of the best color dithering algorithms, but not the one described in TFA -- ordered dithering -- because ordered dithering is not a very good algorithm and is not used much today except when its peculiar artifacts are desired.

And yes, Bresenham's original algorithm does set each pixel it chooses to pure black, but this has nothing to do with its error diffusion mechanism. Bresenham's with grayscale is also a thing and it results in even better line approximations, but it's usually referred to as antialiased Bresenham.